Gold Price Forecast:
Gold Price Forecast: Is XAU/USD at Risk of Further Losses?
Gold has been on the backfoot following the June FOMC meeting at which the central bank revealed an accelerated rate hike schedule. The announcement sparked US Dollar strength which helped to ignite a vicious gold selloff that has seen the precious metal snap its brief uptrend and retake the descending channel that began in August. With the Dollar basket (DXY) showing signs of a potential breakout, gold may be at risk of deeper declines.
Gold (XAU/USD) Price Chart: Daily Time Frame (July 2020 – June 2021)
As outlined in my last gold article, the line in the sand for gold’s recovery rally stood around the $1,850 area. At the time I noted “adjacent to the descending trendline that support is originally derived from is the metal’s 50-day simple moving average (SMA), its 200-day SMA and a Fibonacci level. Together, the various technical markers create an area of considerable support that, if broken, would constitute a significant shift in the technical outlook.” Evidently, the break beneath $1,850 allowed losses to accelerate considerably and the brief recovery rally has been put to rest.
Gold (XAU/USD) Price Chart: 4 – Hour Time Frame (July 2020 – June 2021)
Suffice it to say, gold may require further support in the days ahead – particularly if the US Dollar continues to show signs of strength. Initial support may reside near the recent swing low at $1,760 followed by the double-bottom just south of $1,680.
Dan Nathan, Guy Adami and myself discuss the metal’s fundamental and technical outlook at length in the attached video, check it out for a deeper dive on gold’s current standing. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX