The key trigger for such impressive dynamics in Gold is the weak USD. After a lot of discussions on the market about a possible rate cut by the US Federal Reserve, the USD got under significant pressure.
A bit later, there were enough confirmations of this scenario from a lot of different monetary policymakers. This week, the Fed is going to have a meeting, but no one is expecting the regulator to cut the rate right now – it’s not the right time or place. However, it’s highly likely that the Fed may provide more details, thus putting even more pressure on the American currency and helping Gold to continue its momentum.
At the same time, physical demand for Gold remains pretty smooth without any surges, but this factor provides no fundamental support to Gold.
As we can see in the H4 chart, XAUUSD is trading inside a wide consolidation range; it is forming Expanding Triangle on the top of the rising wave. By now, it has finished the descending impulse towards 1335.85. Today, the pair may form a new consolidation range near the lows to start a correction to the upside with the target at 1348.70. After that, the instrument may resume trading downwards with the short-term target at 1323.15. From the technical point of view, this scenario is confirmed by MACD Oscillator, as its signal line is falling towards 0. After breaking this level, the market may boost its decline.
In the H1 chart, XAUUSD is forming a descending wave; it has already completed the first impulse. Possibly, the pair may be corrected towards 1348.75 and then form a new descending structure with the short-term target at 1323.25. The key target is at 1316.50. From the technical point of view, this scenario is confirmed by Stochastic Oscillator, as its signal line is moving to the downside. After breaking 50, the instrument may fall faster.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.
This article was originally posted on FX Empire
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