Gold price (XAU/USD) has bounced off again from the trend line that I mentioned in my previous forecast. Currently, the price is above 0.8% from its August low as the precious metal attempts a recovery. The safe-haven asset is priced at $1903.71 at press time and is up 0.83% this week.
Typically, the DXY and the price of precious metals have an inverse correlation. A recent example can be the 4% bounce in DXY from its yearly low, which led to a 3.8% decline in gold price per ounce. However, the current bounce in the safe-haven asset appears to be technical, as the DXY is up 0.31% on Wednesday.
The XAU/USD pair finally got the chance to move upside as the rally in the treasury bonds came to a halt. Investors are more likely to chase risk assets when the yields in treasury bonds start to drop. This explains the 0.8% push in gold prices today.
The annual symposium of central bankers at Jackson Hole will be held this week. This meeting will provide clues for investors on the next move by the US Federal Reserve. The minutes of the last FED meeting contained pointed toward another rate hike due to the increased consumer spending. An increase in interest rate will push the demand for gold and other precious metals to the downside.
XAU/USD price chart shows that the price has perfectly bounced off the trendline that I drew in my previous analysis, and it is slowly moving towards the 200 MA, which lies at $1909. This would be a very critical retest. Bulls need to reclaim this level to make the Gold price forecast bullish once again.
The bulls may again target the $1980 resistance if the price breaks above the $1909 level and find strong support above this level. If the price fails to break above the 200 MA, a correction of 5.3% is expected all the way to the $1808 support level.
I’ll keep posting my updated outlook on Gold along with my personal trades on Twitter, where you’re welcome to follow me.
This post was last modified on %s = human-readable time difference 12:15