XAUUSD Gold Forecast And Technical Analysis
- Gold’s weakness is because of the Dollar’s power. Last week was not a good week for USD. USD started the week with a soft tone and started to lose weight Monday by comments from US President Trump as he criticized Powell’s decision as chief of the Federal Reserve over its higher rates policy. The dollar is getting too expensive for Trump, and with the ongoing trade war, he wants to keep a lid on borrowing costs and the Dollar competitive.
- The FOMC Minutes released last Wednesday confirmed the rate hike in September. Some economists have noted that while the U.S. economy has enough momentum to support two more rate hikes this year, the outlook is a lot more uncertain heading into 2019. Currently, markets are pricing in a more than 90% chance of a rate hike in September and a more than 60% chance of a fourth rate hike in December.
- Markets focused on FED chairman’s comments on Jackson Hole Symposium. He was confident about economic growth and said that gradual rate hikes remain appropriated if strong growth in income and jobs continues. However, minor dovish adjustments to his rhetoric that anyway sent the dollar back into sell mode.
In our last week’s forecast, we have mentioned that we might see a correction towards 1208 USD. XAUUSD ended the week at 1205 after testing 1208 resistance. On the smaller chart timeframes, the trend turned to bullish. Gold price is above EMA 50 and SMA 100 on the H4 Chart.
As seen on the H4 chart, Gold broke out the midterm bearish trend line.
We may see the price pulling back and test the broken trend line. 1198 is the key level and bullish correction is likely to continue if the price holds above 1198 USD.
1218 USD is the shorter term key resistance level. Break above 1218 will carry the price 1236 USD. Bears will be waiting at 1236. No trend reversal before daily closings above 1254 USD.
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