Gold Price Forecast: Bulls ready to take on $1900 amid dollar break down
- Gold bulls take a breather, eye best week in three months.
- US dollar break down, US-China woes bode well for gold.
- Technical set up favors the bulls, with US PMIs in focus.
Gold (XAU/USD) continued its five-day surge and refreshed nine-year high at $1898.44 on Thursday. The key theme for the relentless rise in the yellow metal was the broad US dollar break down, mainly driven by signs that the US economic recovery is faltering. Dismal US jobless claims data, in the face of the continued surge in the coronavirus cases and the subsequent lockdowns in some of the Southern states, exacerbated the pain in the greenback. The non-yielding gold also benefited from the falling US equities and yields, which suggested that a prolonged period of low rates is here to stay, with the Federal Reserve (Fed) expected to do more next week, as the economic turnaround loses steam.
The precious metal is set to extend its upbeat momentum, as the greenback remains pressured by the latest report that the Republicans delayed the announcement of a $1tn stimulus package amid lingering disagreements. Further, the US Markit Manufacturing and Services PMIs could offer little respite to the dollar bulls. Additionally, the traditional safe-haven, gold, could also take advantage of the intensifying risk-off trades after Beijing ordered the US to close its consulate in Chengdu, in a tit-for-tat response to the Houston closure.
Short-term technical outlook
Gold: Hourly chart
The hourly chart clearly depicts that the bulls are likely to remain it control as long as the price manages to stay above the critical $1886/85 region, the confluence of the bullish 21-hourly Simple Moving Average (HMA) and rising trendline support.
The upside bias also appears intact as the hourly Relative Strength Index (RSI) stays above the midline, in the bullish territory. Therefore, the price could see a fresh leg higher towards the multi-month highs before testing the $1900 level.
If the bulls take out that level, the next hurdle at the rising trendline resistance of $1908 could be challenged en route the record high of $1921.17.
However, a convincing break below the aforesaid critical support zone ($1886/85) will confirm the rising channel breakdown, triggering a fresh corrective slide in the metal towards the upward-sloping 50-HMA at $1873.23.
The next downside target is aligned around $1850, where the bullish 100-HMA lies.
Gold: Additional levels to consider
Reprinted from FXStreet,the copyright all reserved by the original author.
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