Gold Price Prediction: Gold Set for Bearish Correction, Sell Signal in Play!

During Thursday’s Asian trading session, the precious metal gold succeeded to stop its previous two-day bearish performance and drew some bids around the $1,790 level, mainly due to the ever-increasing cases of COVID-19 in countries such as India, Japan, and Brazil, which raised doubts over the global economic recovery and contributed to the safe haven metal gains. Apart from this, the ongoing bearish bias surrounding the U.S. dollar was also seen as one of the key factors that lend some additional support to the dollar-denominated commodity (gold) as its price is inversely related to the price of the U.S. dollar.

Moreover, U.S. President Joe Biden’s latest warnings to China and Russia also test the market’s risk-on mood, which was seen as another key factor that boosts the safe haven metal prices. In contrast, the prevalent market upbeat mood, triggered by the hopes of faster vaccinations and U.S. relief packages, turned out to be one of the key factors that kept the lid on any additional gains in gold. Besides, the upticks in the bullion price were also capped by the reports suggesting that U.S. President Joe Biden addressed the Joint Congress for the first time after assuming office. As of writing, the bullion price is trading at 1,784.86 and consolidating in the range between 1,781.36 and 1,790.00.

Despite the ever-increasing coronavirus (COVID-19) numbers in countries such as India, Japan, and Brazil, the market trading sentiment managed to extend its overnight bullish performance and rise to a fresh record high 4,200 as U.S. President Joe Biden urges U.S. Congress for the stimulus package. The U.S. President Joe Biden addressed the Joint Congress for the first time after taking office. However, the key part of President Joe Biden’s speech was the key relief packages. In his speech, Joe Biden has pushed policymakers to back his relief packages, totalling about near $4.0 trillion. Besides, the gains in the S&P 500 Futures were further bolstered by the U.K.’s formal recognition to the European Union (E.U.) ambassador for the first time after Brexit back the market optimism. However, the bullish bias surrounding the market sentiment was seen as one of the key factors that kept the lid on any additional gains in gold prices.At the USD front, the broad-based U.S. dollar failed to stop its early-day bearish performance and remained depressed on the day amid market risk-on mood, which urged investors to turn away from the safe-haven U.S. dollar. Movin on, the U.S. dollar is expected to face further losses, pressured by rising trade and fiscal deficits. Conversely, the rise in real yields in the United States, backed by a strong recovery in the economy, may help the U.S. dollar to limit its deeper losses. Hence, the prevalent losses in the U.S. dollar were seen as one of the key factors that help the gold prices to stay bid.

Across the Atlantic, the ever-increasing COVID-19 numbers in countries such as India, Japan, and Brazil keep challenging the upbeat market mood, which was seen as another key factor that boosts the gold prices. Apart from this, U.S. President Joe Biden sounds tough on China and Russia. As per latest reports, Biden told China President Xi Jinping that the U.S. military would maintain a strong presence in Indo-Pacific region. In the meantime, the U.S. also warned Russian President Vladimir Putin of the consequences.

Moving on, market traders will keep their eyes on Advance GDP q/q, which is expected at 6.5% against 4.3% prior. In addition, investors will also be closely observing any headlines from Russia and China as they respond to Biden. Meanwhile, the U.S. dollar price movement will continue to play a key role in gold’s direction.

S1 1735.69
S2 1755.64
S3 1768.57
Pivot Point 1775.59
R1 1788.52
R2 1795.54
R3 1815.49

The precious metal GOLD is trading with a strong bearish bias at 1,777 level. On the 4-hour timeframe, the pair has violated an upward channel that was supporting the precious metal at 1,780 level. For now, it may encounter resistance at the same support become resistance level. On the lower side, gold can gain immediate support at 1,767, and violation of this level can extend further selling trends until 1,749. Since the MACD and RSI were also supporting a bearish trend, we decided to open a sell signal around 1,776. The idea is to target the 1778.89 level with a stop loss of around 1788.89. Good luck!