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  • According to the World Health Organization, over four million COVID-19 infections were reported from July 26 to August 1.
  • Consumer Price Index for July remained flat with the expectations of 0.5%. 
  • Forex trading market participants may buy above the $1,753 level to target the $1,765 and $1,774 levels.

On Thursday, the yellow metal gold is trading with a slight bullish bias at a 1,755 level. Gold price forecast remains bullish; however, it has to violate the 50% Fibonacci retracement level of 1,753 to surge further.  

If you are interested in trading XAU/USD with forex robots, check out our guide.

US Inflation Data Underpins Safe-haven Gold  

For more than a week, gold has been trading under a bearish pressure amid the fears that the Fed might soon start tapering its asset purchases. Moreover, it could increase interest rates, all because of the stronger than anticipated US jobs report. However, the CPI data from July remained unchanged with the projections and reduced the fears that Fed could start tapering soon.

The highly awaited gauge for inflation CPI report came in line with the expectations. Thus, it left the Federal Reserve with no option but to adopt the wait-and-see approach and interpret more data to decide further.

Meanwhile, another thing supporting gold on Wednesday’s trading session was the declining prices of the greenback. 

Weakness in US dollar Push Gold Above 1,750

The US dollar index that covers the greenback’s value versus the basket of six major currencies fell on Wednesday. It reached 92.8, helping gold gather some strength. Meanwhile, the US Treasury Yield on a 10-year note also declined on Wednesday after rising for four consecutive sessions. These Treasury yields reached 1.302%, which helped gold by reducing the opportunity cost of holding non-yielding assets.

On the data front, at 17:30 GMT, the Consumer Price Index for July remained flat with the expectations of 0.5%. From July, the Core CPI dropped to 0.3% versus the forecasted 0.4%. The weaker economic data weighed on the US dollar and added further gains in gold. At 23:00 GMT, the Federal Budget Balance also remained flat with the expectations of -302.1B.

Gold Safe-haven demand boosts amid Covid fears. 

The growing spread of the Delta variant of coronavirus triggered a surge in infections worldwide, with the major contributors as the United States and India. According to the World Health Organization, over four million COVID-19 infections were reported from July 26 to August 1. However, an 8% decline in the death rate was also reported during the previous week.

Last week, the highest number of infections were reported from the United States, followed by India, Indonesia, Brazil, and Iran. The US reported about 761,216 new infections in that week, the highest total since early February. The Delta variant has been spread to 135 countries, and the sustained surge in global infection cases also raised concerns over the economic recovery. These concerns supported the US dollar due to its safe-haven status and reversed its bearish trend on Wednesday.

Gold Price Forecast
XAU/USD Daily Chart

Gold Price Forecast – Technical Levels

Support Resistance

1733.81 1765.06

1713.78 1776.28

1702.56 1796.31

Pivot Point: 1745.03

Gold Price Forecast – Daily Technical Analysis: 50% Fibonacci Extending Resistance 

The XAU/USD price forecast remains bullish above the $1,736 resistance become support level. Gold has crossed over 38.2% Fibonacci retracement level of 1,737, and now it’s almost testing 50% Fibonacci retracement level at 1,753 level.  

Bullish crossover of 1,753 level can lead gold price further higher until 1,775 level that marks 61.8% Fibonacci retracement. On the bearish side, the support holds around 1,737 levels extended by 50 days EMA (exponential moving average – red line). In contrast, a bearish crossover of 1,737 level can open up additional room for selling until 1,720. 

Lastly, the leading indicator Stoahstic RSI has entered the overbought zone as it holds at 97.77 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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