- US Prelim UoM Consumer Sentiment data from the University of Michigan remains in highlights today.
- Gold price forecast remains bullish as it’s crossing over the 50% Fibonacci retracement level of 1,754.
- Forex trading market participants may buy above the $1,753 level to target the $1,765 and $1,774 levels.
On Friday, the yellow metal gold is trading with a bullish trend at a 1,758 level. Gold is precisely trading in line with my previous Gold Price Forecast – August 12, and now it’s heading towards the 1,764 level. The US dollar index that estimates the greenback’s worth versus the basket of six major currencies surged to 93.04 level and weighed on the precious metal.
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On the flip side, the US Treasury Yields on benchmark 10-year note also increased on Thursday and reached 1.379% amid the improved market sentiment. This added further pressure on gold prices. The precious metal followed the previous daily trend during early trading hours and surged. However, the gains lost after the American trading hours revealed better-than-expected PPI data that supported the US dollar and added weight on gold.
The rising prices of gold in early hours and declining prices in late hours kept the precious metal unchanged for the day, and gold consolidated.
On the data front, at 17:30 GMT, the Producer Price Index for July surged to 1.0% against the expected 0.6% and supported the US dollar and added pressure on gold. From July, the Core PPI also rose to 1.0% against the projected 0.5% and supported the US dollar, and dragged precious metal on the lower side. The Unemployment Claims from last week remained flat with the forecasts of 375K.
US Senate passed President Joe Biden’s $3.5 Trillion Budget Proposal
Meanwhile, the US Senate passed President Joe Biden’s $3.5 trillion budget proposal that is expected to bolster family services, health, and environment programs. The approval increased the prospects of raising the debt ceiling. This supported gold prices in the depressed market mood where the US dollar was in strength and weighing precious metals continuously.
On the other hand, the prospects of early tapering also kept supporting the greenback throughout the week after the US Federal Reserve officials talked about reducing support to the economy. The threshold established by the Fed (Federal Reserve) for starting increasing interest rates and decreasing asset purchases was near to be achieved.
One of them has been achieved already, and the other one was in progress. This raised the expectations that Fed might start tapering sooner than expected and keep supporting the US dollar. The dollar’s strength then weighed on the yellow metal and forced it to remained unchanged for the day.
Later today, the investor’s focus will remain on the US Prelim UoM Consumer Sentiment data from the University of Michigan. Economists are expecting a figure of 81.2 versus 81.2 released during the previous month. Therefore, the data may not drive significant changes in gold until there’s a significant deviation.
Gold Price Forecast – Technical Levels
Support Resistance
1743.06 1760.06
1734.33 1768.33
1726.06 1777.06
Pivot Point: 1751.33
Gold Price Forecast – Daily Technical Analysis: 50% Fibonacci Crossover
The XAU/USD price forecast remains bullish as it’s crossing over the 50% Fibonacci retracement level of 1,754. On the 4-hour timeframe, the yellow metal gold is trying to cross and close above 1,754 levels. If this happens, the chances of a bullish trend continuation will be vital.
Bullish crossover of 1,754 can lead gold price further higher until 1,775 level of 61.8% Fibonacci retracement. On the bearish side, the support holds around 1,754 levels extended trendline upward on the 4-hour chart. Whereas the 50 days moving average will be supporting the metal at 1,742 levels.
A bearish breakout of 1,742 support levels opens up additional room for selling until the 1,737 level. For the moment, the bullish bias is more substantial; therefore, the breakout of the 1,765 resistance level can lead the gold price towards the 1,774 level.
Lastly, the leading indicator Stoahstic RSI has entered the overbought zone as it holds at 93.77 level. This demonstrates that sellers can enter the market anytime, as bulls may trigger profit-taking. Yet, we can take a buy trade in gold as it’s breaking above an ascending triangle pattern on a 2-hour chart. The Forex trading market participants may buy above the $1,753 level to target the $1,765 and $1,774 levels. All the best!
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