Gold price forecast: XAU/USD bull run hangs in the balance

Gold (XAU/USD) price erased most of the gains it made last week as traders reflected on the hawkish statement by Jerome Powell, the Federal Reserve chair. It dropped to a low of $1,812, which was the lowest level since December 30th. Gold has dropped by more than 7.50% from the highest level this year. 

Gold price prediction 

Gold dropped sharply while the US dollar index made a strong comeback, as I had predicted in this article. This price action happened on the first day of Jerome Powell’s testimony in Senate, where he reiterated that the Fed will continue hiking interest rates in the coming months. 

Analysts now expect that the bank will hike interest rates by about 0.50% in March, higher than the previous estimate of 0.25%. The terminal rate is expected to be between 5.5% and 6.0%. In most periods, gold tends to underperform in a period when the Fed is extremely hawkish.

On the daily chart, we see that gold price retested the important resistance level at $1,805, which was the lowest level last week. As it dropped, the XAU/USD pair movd below the 50-day and 25-day moving averages, signaling that bears are still in control.

Gold has moved between the 50% and 38.2% Fibonacci Retracement level while the Relative Strength Index (RSI) and the MACD have continued retreating. The price is at the top of the trading range of the Murrey math lines. 

Therefore, gold price will likely continue falling as sellers target the next key support level at $1,761, which is the major stop and resistance (S&R) level. A drop below that level will bring the view to $1,700. 

XAU/USD chart by TradingView

XAU/USD price forecast (4H)

XAU/USD price has been in in a bearish trend and is sitting at the ultimate support of the Murrey math lines. Like on the daily chart, the pair has moved below all moving averages and is hovering slightly above the important support level at $1,804, the lowest point since last week. The histogram and two lines of the MACD have moved below the neutral level.

It has also formed a bearish flag pattern, which is usually a bearish sign. Therefore, the pair will likely have a bearish breakout, with the next key level being at $1,750 followed by $1,700. 

The post Gold price forecast: XAU/USD bull run hangs in the balance appeared first on Invezz.

dollar
gold
reserve
interest rates
fed
us dollar