- Gold slips below $1,830 despite weakness in the greenback.
- Jobless claims surged to 360K versus the projected 350K and weighed on the U.S. dollar.
- The Fibonacci indicator to support gold at $1,822 and $1,818 on Friday.
Gold prices closed at $1829.00 after placing a high of $1835.00 and a low of $1820.60. Gold remained flat throughout the day as it ended Thursday’s trading session on the same level it started its day with. Gold price forecast remains bearish on Friday after it hit a one-month highest level on Thursday.
Gold’s bullish trend was triggered following the dovish comments from the U.S. Federal Reserve President Jerome Powell.
Some concerns over a delayed global economic recovery also underpinned gold prices. However, gold couldn’t enjoy its one-month highest level for long and dropped in American trading hours after the U.S. dollar gathered strength.
Stronger Dollar Brings Gold Down to $1,826 After Testing $1,834
The U.S. Dollar Index that measures the greenback value against the basket of six major currencies rose to 92.69 level on Thursday.
It helped the U.S. dollar remain green for the day that eventually reversed the rising prices of the yellow metal.
On the data front, at 17:30GMT, the Philly Fed Manufacturing Index dropped to 21.9 against the expected 28.1 and weighed on the U.S. dollar and supported gold prices.
Gold Slips Despite Sluggish U.S. Jobless Claims
The Unemployment Claims from the previous week surged to 360K against the projected 350K and weighed on the U.S. dollar. The Empire State Manufacturing Index surged to 43.0 against the expected 17.9, supported the U.S. dollar, and weighed on the yellow metal. The Import Prices remained flat as expected 1.0%.
At 18:15 GMT, the Industrial production for June dropped to 0.4% against the projected 0.6%. Moreover, the Capacity Utilization Rate declined to 75.4% versus the forecasted figure of 75.7%. It also weighed on the U.S. dollar and supported gold prices higher.
President Charles Evans Dovish Remarks Underpins Gold at $1,822
The Federal Reserve Bank of Chicago President Charles Evans said that the U.S. job growth has been slower than expectations. If the central bank wants to reduce its support for the economy, more improvement will be needed.
Evans said that there were still things to assess in substantial further progress, as the recent months of lower employment growth. He added that these things need to improve further for Central Bank to adjust its monetary policy stance.
The Federal Reserve has promised to continue to buy mortgage-backed and Treasury securities worth $120 billion a month. Specifically, until there’s substantial further progress towards the inflation goal of 2% and full employment set by the bank.
The Chairman of the Federal Reserve, Jerome Powell, repeated his comments on the second day of his testimony. Powell said that Fed would continue to provide powerful support for the U.S. economic recovery from the coronavirus pandemic.
Despite his repeated dovish comments, investors kept buying the U.S. dollar. They were widely expecting that the Fed will begin asset tapering by the end of 2022. This keeps the gold price forecast bearish on Friday.
Gold Forecast: Double Bottom Supports at $192.68
Support Resistance
1821.40 1835.80
1813.80 1842.60
1807.00 1850.20
Pivot Point: 1828.20
Gold Forecast – Technical Analysis: Fibonacci to support at $1,818
Gold forecast is quite bearish on Friday, as the metal is facing strong resistance at 1,834. Gold has tested this resistance level but failed to cross above 1,834.
Closing of candles below 1,834 level is driving bearish retracement in the market. MACD, the leading technical tool, is demonstrating weakness in the bullish trend.
On the 4- hour chart above, we have applied the Fibonacci tool that’s suggesting odds of a bearish retracement until 1,823 (23.6%) and 1,818 (38.2%) levels.
The 50 periods EMA (exponential moving average – red line) is likely to support gold at 1,822 level. The same level also marks almost 23.6% Fibonacci retracement level. Thus, gold may gain strong support at the 1,822 level today.
The gold price forecast is bearish today. Thus, forex trading participants may look for selling below 1,828 levels to target 1,822 and 1,818 levels. On the flip side, buyers can be seen over 1,818 levels today.
All the best.
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