- Summary:
- Gold price forecast - XAU/USD is having another pullback due to an increase in dollar strength. Bulls need to hold the 200 MA which lies at $1,918.
Gold price (XAU/USD) continues its bearish leg after making a lower high on 30th August. The price for the precious metal has corrected 1% from $1942. Currently, Gold is priced at $1923, down 0.12% till press time.
The correction in the price of Gold and other safe-haven assets can be attributed to the rising dollar strength (DXY) index. The DXY index, which is a measure of the dollar’s strength, is up 1.5% after finding support at 200 MA. The Index is now standing at its new 5-month high at $104.8.
Investors Remain Cautious Ahead Of FOMC Meeting
The FOMC meeting on 20th September is keeping the markets volatile. The meeting will decide if the interest rates should be increased or kept constant. According to the CME FedWatch Tool, a staggering 93% of the market expects the rates to remain the same. Only 7% expect an increase in the rates.
In other news, the weak economic data from China and the high interest rate hikes have investors worried. Investors remain bullish on the dollar due to high bond yields, which is causing the DXY to rise. Consequently, the price of Gold and other precious metals is facing headwinds.
Gold Price To Retest 200 MA
The chart for XAU/USD shows the price is heading towards the 200 MA for a retest. The chart also shows the three retests of the downward trendline since the breakout. Nevertheless, the price of the precious metal still stands 6.5% above its yearly lows.
For the gold price forecast to remain bullish, bulls need to hold the 200 MA at $1918. In such a case, I expect a 3.05% rally to the 1985 resistance level. However, the price might be at the mercy of the bears if it breaks below 200 MA.
I’ll keep posting my updated outlook on Gold along with my personal trades on Twitter, where you’re welcome to follow me.
