Gold Price(XAU/USD) Outlook: A Break of $1789 Could Lead Towards $1828/1840

Summary:

An evolving bullish pennant on the gold price (XAU/USD) daily chart could indicate a march towards 1828/1840, if the 1789 resistance is taken out.

Gold price (XAU/USD) picked up some new demand on Friday after the Dallas Fed President Robert Kaplan said (as per a Reuters report) that the decision to start tapering the QE program would be a distinct process from the decision on interest rates.

Kaplan also said that he expected GDP to grow 6.5% in 2021 but that the Delta variant of COVID-19 needed close monitoring. He also indicated that if the Delta variant started to affect demand or show signs of persistence, the Fed would adjust its policy views.

These comments cooled off demand on the greenback and allowed the gold price to rise by 0.37%.

Gold Price (XAU/USD) Outlook

The slight recovery in the gold price has taken the pair towards the 1789.49 resistance once more. The price seems to be forming a bullish pennant at this time. An advance in the gold price will require a break above the 1789.49 resistance, confirming the flag and opening the door for a measured move that potentially targets the resistance zone between 1828 and 1840. This move would have to take out 1815.20.

Conversely, rejection at 1789.49, followed by a pullback, could lead to a breakdown of the pennant’s consolidation area. This move would invalidate the pattern and clear the pathway towards 1763.30, with 1741.01 serving as an additional target to the south.