Gold Price Forecast: Bears unfazed by risk-off

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XAU/USD Current price:  $1,794.19

  • US Treasury yields are sharply down, taking their toll on the greenback.
  • FOMC Meeting Minutes and hawkish US officials paving the way to taper.
  • XAU/USD broke above a critical Fibonacci resistance, eyes 1,808.63.

Gold Price Forecast: Bears unfazed by risk-off

Gold runs on the back of a broadly weaker dollar, the latter hurt by falling US government bond yields. The release of US inflation figures, upwardly revised to 5.4% YoY in September, was the latest catalyst ahead of the release of the FOMC Meeting Minutes. XAU/USD trades at around $1,794 a troy ounce, its highest in almost a month, as the latest US CPI figures back policymakers determination to kick-start tapering before the year-end.

The dollar remains on the back foot ahead of the FOMC Meeting Minutes. Fed officials maintained alive the tapering talk these days, despite a dismal employment report. Back in September, Chief Jerome Powell and Co  delivered a hawkish message, anticipating that tapering “may soon be warranted.” The document is expected to be hawkish, although worth noting that it was produced before the latest dismal Nonfarm Payrolls report.

Meanwhile, US stocks trade mixed. European indexes closed mostly up, although with limited gains. The yield on the 10-year US Treasury note stands at around 1.55% after bottoming at 1.52%.

Gold price short-term technical outlook

XAU/USD trades above the 61.8% retracement of its latest daily decline at 1,777.75, the immediate support level. The daily chart shows that the metal tested on the downside a flat 20 SMA, while the rally stalled at around a bearish 200 SMA. In the same chart, technical indicators have turned sharply higher, reflecting the ongoing momentum.

In the near term and according to the 4-hour chart, gold is poised to extend its advance. The price has run beyond all of its moving averages, while technical indicators maintain their upward slopes despite being in overbought territory. The next relevant resistance level and a possible bullish target is 1,808.63, the high from September 14.

Support levels: 1,777.75 1,764.35 1,748.05  

Resistance levels: 1,796.17 1,808.63 1,820.02

View Live Chart for the XAU/USD

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