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Gold Outlook: XAU/USD Remains Vulnerable to Dollar Strength

Gold Outlook: XAU/USD Remains Vulnerable to Dollar Strength

Tammy Da Costa, Analyst

Gold/Silver Forecast: Neutral

  • Gold (XAU/USD) remain supported as inflation expectations weigh on risk sentiment
  • Inflation, COP26 and global interest rates remain key catalysts for price action
  • Fed interest rate decision and remain key catalysts for Gold prices

To Learn More About How to Trade Gold & Other Commodities, Visit DailyFX Education

After six consecutive days of gains, Gold prices have run into a wall of resistance above the key psychological level of $1,860.

Although the combination of higher inflation numbers and geopolitical tensions continue to weigh on risk sentiment, increased expectations of higher rates have boosted the demand for precious metals which are likely to weigh on risk sentiment for the foreseeable future.

Although Gold and Silver continue to hold a reputation as a hedge against inflation, higher than expected CPI data boosted the demand for safe-haven precious metals, allowing both Gold and Silver to continue along an upward trajectory that continues to hold, at least for now.

Gold Outlook: XAU/USD Remains Vulnerable to Dollar Strength

DailyFX Economic Calendar

Gold Price Analysis:

With inflation pressures on the rise, Gold and Silver prices continue to test critical levels of support and resistance, bringing fundamentals to the forefront of risk sentiment.

From a technical standpoint, price action on the weekly chart has recently broken above trendline support with the commodity channel index (CCI) lingering in overbought territory.

Gold Weekly Chart

Gold Outlook: XAU/USD Remains Vulnerable to Dollar Strength

Chart prepared by Tammy Da Costa using TradingView

Meanwhile, after the Michigan sentiment data came in lower than expected, Gold and Silver prices rose temporarily while the CCI (commodity channel index) remained in positive territory.

After the formation of a hanging man candle on the daily chart, the probability of a correction or potential reversal of Gold may be expected if central banks agree to tighten policy.

Gold Daily Chart

Gold Outlook: XAU/USD Remains Vulnerable to Dollar Strength

Chart prepared by Tammy Da Costa using TradingView

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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