Gold Price Forecast: XAU/USD – Key Support Level Holds Up
XAU/USD Technical Analysis
- Gold rallied above the $1,800 handle on the back of Covid-19 fears
- Bullish signals on XAU/USD price chart
Gold Price – Bulls Ease Up
On Wednesday, Gold surged to an over seven and half-year high at $1,818 then reversed lower as some bulls seemed to pull back. On Friday, the price closed the weekly candlestick in the green with a 1.3% gain. Alongside that, the Relative Strength Index (RSI) abandoned the overbought territory and reflected a slower bullish momentum.
The precious metal rallied over fears that the coronavirus resurgence in the US and elsewhere may cause new restrictions and slow down the economic recovery.
Gold DAILY PRICE CHART (April 1, 2019 – July 13, 2020) Zoomed out
Gold DAILY PRICE CHART (April 6 – July 13, 2020) Zoomed In
On June 26, the price rebounded from the upper line of the bullish rectangle highlighting that bullish momentum remained intact. On Wednesday, the market climbed to the current trading zone $1,796 - $1,859 then rebounded twice from the low end of the zone and indicated that bulls still have the upper hand.
Gold may be on its way for a test of the high end of the zone, and any further close above that level could encourage bulls to push the price even higher towards $1,921.
That said, a close below the low end of the zone reflects bull’s hesitation and could lead some of them to exit the market causing a possible fall towards $1,752. Any further close below that level could send Gold even lower towards $1,685.
Gold Four-HOUR PRICE CHART (June 20 – July 13, 2020)
In early July, XAU/USD rallied above the downtrend line originated from the July 1 high at $1,789 and generated a bullish signal. Therefore, a break above the downtrend line originated from the July 8 high at $1,818 indicates that the price could rally further, while a break below the uptrend line originated from the July 2 low at $1,757 signals a weaker bullish sentiment.
To conclude, a break above the $1,818 may trigger a rally towards $1,830, while any break below $1,789 could send Gold towards $1,772. Nevertheless, the daily resistance and support levels underscored on the four-hour chart should be watched closely.
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.