Gold (XAU/USD) has been in a downtrend since May 2023. During this time, the price of the precious metal fell by 7%. However, after a deeper pullback last month, the price has rebounded strongly and showing some strength. The technical analysis reveals that the recent bounce has the potential to become an upside rally.
On Tuesday, Gold price per ounce is rising after a sideways price action during the first trading session of the week. Bullion price is up 0.62% today, and it is showing a positive sentiment during its London session. This month’s key event will keep the price in check in the coming weeks.
A look at the following chart of the dollar strength index reveals that the ongoing bounce in Gold and Silver prices is fueled by weakness in the dollar. The DXY index is currently trading at its lowest level since May 11, and there is a chance of more downside.
If the DXY index heads for a retest of its 101 support, Gold price may keep rallying in the coming weeks. However, the upcoming release of the June CPI report on July 12 will play a crucial role in this regard, together with the FOMC meeting on 25-26 July.
The following XAU/USD chart shows that the pair has successfully retested the diagonal resistance level presented by the black trendline, flipping it into support. As long as the price remains above this trendline, the Gold price forecast will remain bullish.
A break below this trendline will put a deeper pullback to $1850 on the cards. On the other hand, bulls need to reclaim the $1983 level to signal a proper bullish reversal and aim for a new all-time high in 2023.
In the meantime, I’ll keep sharing the updated Gold forecast and my personal trades on my Twitter, where you are also welcome to follow me.
This post was last modified on Jul 11, 2023, 10:33 BST 10:33