Gold Price Forecast: XAU/USD Rally Loses Steam
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Gold Price - XAU/USD Technical Analysis
- Gold price stabilizes below $1,750/oz.
- Key levels and signals to keep an eye on
On Friday, Gold rebounded from $1,751- its highest level in seven and a half years. Afterward, the price closed the weekly candlestick in the green with a 2.3% gain.
Alongside that, the Relative Strength Index (RSI) rose to 63 indicating that bulls were in charge.
Gold DAILY PRICE CHART (DEC 5, 2018 – May 21, 2020) Zoomed out
Gold DAILY PRICE CHART (FEB 24 – MAy 21, 2020) Zoomed In
Based on analysis of the daily chart, on May 14 Gold broke above the upper line of the symmetrical triangle discussed in our last update eyeing a test of $1.796. This week, the rally has stopped at $1,765 then retreated and remained in the current trading zone $1,685- $1.752 reflecting a weaker bullish momentum.
That said, a close above the high end of the aforementioned zone signals a possible bullish comeback and may cause a rally towards $1,796. A further close above that level could extend this rally towards $1,859. Although, the weekly resistance levels underlined on the chart (zoomed in) should be considered.
Otherwise, more hesitation from bulls could lead some of them to exit the market reversing the direction towards the low end of the zone. A further close below that level may send Gold even lower towards $1,635. In that scenario, the weekly support area and level underscored on the chart should be kept in focus.
Gold Four-HOUR PRICE CHART (April 01 – May 21, 2020)
Looking at the four-hour chart, last week the price respected the uptrend line originated from the May 1 low at $1,670 then rallied indicating that bulls were in charge. Therefore, any violation of this line would be considered a bearish signal.
A break below $1,716 would be considered an additional bearish signal and could send XAU/USD towards $1,692. Nonetheless, the weekly support levels marked on the chart should be monitored. In turn, a break in the other direction i.e. above $1,754 may trigger a rally towards $1,776. In that scenario, the May 18 high at $1,765 should be watched closely.
See the chart to find out more about the key technical levels in a further bullish/bearish scenario.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.