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  • The DXY surged to 92.96 on Thursday and weighed heavily on the precious metal. 
  • Gold prices were closed at $1754.15 after reaching a high of $1797.25 and a low of $1745.55.
  • Forex trading market participants may sell below the $1,769 level to target the $1,750 and $1,745 levels.

Gold prices were closed at $1754.15 after reaching a high of $1797.25 and a low of $1745.55. Gold fell for the second consecutive session on Thursday, falling to its lowest level since August 12th, owing to a strong US dollar and rising US Treasury yields. On Friday, the gold price forecast remained bullish above the 1,745 support level, which is the double bottom level. 

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On Thursday, the greenback was strong across the board with a better-than-expected Retail Sales data release. The DXY surged to 92.96 on Thursday and weighed heavily on the precious metal. US Treasury yields on the benchmark 10-year note rose for the second consecutive session, reaching 1.35%, adding to the greenback’s gains while pushing precious metals lower.

Quick Update on Economic Events

On the data front, at 17:30 GMT, the Core Retail Sales from August surged to 1.8% against the forecasted-0.1% and supported the US dollar, which dragged gold prices lower. In August, the retail sales also rose to 0.7% against the predicted-0.7% and supported the US dollar, adding further gold loss. The Philly Fed Manufacturing Index increased to 30.7 in September, up from 18.9 in August, supporting the US dollar and adding further downside momentum to gold. 

The unemployment claims from last week surged to 332K against the anticipated 325K and weighed on the US dollar, which caused further losses in the yellow metal. At 19:00 GMT, business inventories remained flat with an expected 0.5%. The US retail sales data rose unexpectedly in August, allowing the US dollar to hold near a three-week high against a basket of major currencies on the back of renewed expectations for earlier tapering by the US Federal Reserve.

US Federal Reserve Policy in Focus Next Week 

The market’s focus has been shifted to the two-day policy meeting held on September 21 and 22. Investors hope that the Fed will provide clues about when the US central bank will withdraw its asset purchases. These expectations continued to support US Treasury Yields, raising the opportunity cost of holding non-yielding bullion, and precious metals fell on Thursday as a result.

Furthermore, many members of the Federal Reserve were in support of tapering economic stimulus measures this year, and therefore, the outlook for gold has turned negative. Despite higher than expected initial jobless claims from last week, the US dollar remained firm on board as the focus was more on the Fed’s decision on tapering than anything else.

Gold Price Forecast
Gold 4-Hour Timeframe

Gold Price Forecast – Daily Support and Resistance

Support Resistance

1734.05 1785.75

1713.95 1817.35

1682.35 1837.45

Pivot Point: 1765.65

Gold Price Forecast – 50% Fibonacci Retracement Level in Focus

On Friday, the gold price forecast remained bullish above the $1,745 support level, which is the double bottom level. The closing of candles below the pivot point resistance level of 1765.65 also provides major pressure on gold. 

The oversold gold has already completed 23.6% Fibonacci retracement at $1,760 levels. On the bullish side, it’s now heading north to complete a 38.2% Fibonacci retracement at a $1,769 level. Further on the higher side, the next resistance will prevail at the $1,777 level that marks 50% retracement for gold. 

On the 4- hour timeframe, the 50 days EMA may provide resistance at the 1,777 level. Furthermore, the leading indicator, Stochastic RSI, remains below 50, indicating a strong gold-selling trend. Therefore, Forex trading market participants may sell below the $1,769 level to target the $1,750 and $1,745 levels. Alternatively, traders can take a buy position above the $1,760 level today. All the best!

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