Gold Price Forecast:
- Gold suffered a serious decline to start last week, cratering more than 5% on covid vaccine headlines
- Still, price has maintained its trading range between two opposing technical levels
- With little scheduled event risk in the days ahead, a continuation of the current trading range seems likely
Gold Price Forecast: XAU/USD Consolidation Continues as Range Holds
Gold suffered a staggering decline last week on news of a potential coronavirus vaccine but has since recouped some losses. Since the public perception around the uptake of an eventual vaccine has cooled somewhat, risk assets have slowed their gains and many safe havens have begun to stem their declines. That being said, gold seems susceptible to a continuation of its current trading range until a clear catalyst arrives to suggest otherwise.
To that end, support around $1,850 and nearby resistance along the $1,920 mark look to mark the lower and upper bounds of the commodity’s current trading range. Since the longer-term fundamental outlook remains largely unchanged in my view, the technical outlook could hold the more pertinent clues as to which direction price will head in the near future.
Gold Price Chart: 4 – Hour Time Frame (July 2020 – November 2020)
Confined between two horizontal levels and grasping for its next move, further consolidation in the form of a slow grind sideways seems likely for the time being. Still, a break through either of the barriers could open the door to an extension in that direction and eventually see gold test the limits beyond.
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Originating from the August high and low, two descending trendlines likely mark the secondary boundaries to the current trading range that could look to keep the broader pattern intact even if $1,850 and $1,920 are broken.
Thus, the current gold outlook lends itself to range trading strategies until either side surrenders. Should a break occur, break out strategies might prove more appropriate but any break seems unlikely in the coming days as the economic calendar remains relatively sparse. In the meantime, follower @PeterHanksFXon Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX