Gold Price Forecast: Upward Trendline Supports at $1,786
Arslan Butt • 2 min read
The gold price forecast seems bearish, as it closed at $1,794.95 on Wednesday, after reaching a high of $1,809.25, and a low of $1,783.05. GOLD reversed its course on Tuesday, amid the increased strength of the US dollar. The US dollar index, which measures the greenback’s value against a basket of six major currencies, rose and extended its gains on Tuesday, to reach 94.02, adding to the pressure on thegold prices. On the other hand, the 10-year Treasury yields on the 10-year note fell to 1.60% on Tuesday, limiting any further declines in the price of the yellow metal.
Gold prices fell more than 1.5% on Tuesday, snapping a bullish streak that lasted five session, as the US dollar strengthened and the risk appetite in the market increased. Stronger-than-expected earnings from tech companies drove the benchmark S&P 500 index to a record high during Tuesday’s trading session, which took the shine off off the safe-haven gold.
A Quick Economic Outlook
On the data front, at 18:00 GMT, the House Price Index for August came in. It dropped to 1.0%, against the expected 1.5%, which weighed on the US dollar, limiting further losses in the gold prices. The S&P/CS Composite-20 HPI fell to 19.7% for the year, which was down from the expectations of 20.1%. This also put downside pressure on the US dollar and limited the drop in the gold prices. At 18:59 GMT, the Richmond Manufacturing Index for October was released, showing a surge to 12, against the expected reading of 4. This gave the US dollar a boost and added to the negative pressure on the yellow metal.
At 19:00 GMT, the CB Consumer Confidence figures also showed an upswing to 113.8, against the predicted 108.4, which further supported the greenback, ultimately adding to the losses in the gold prices. In September, the increase in new home sales to 800,000, versus the forecast of 755K, boosted the US dollar, causing gold prices to fall further.
The US Federal Reserve Policy Meeting
The next US Federal Reserve policy meeting is scheduled for the coming week, and traders are betting that the Fed will reduce the pace of the asset purchases, that were initiated to curb the economic effects of the pandemic. Investors believe that the Fed will opt to reduce asset purchases, as the persistently high inflation levels have turned out to be non-transitory, contrary to earlier expectations, and this kept the US dollar higher and gold lower for the day.
Gold Price Forecast – Upward Trendline Supports at $1,788
In the 4-hour timeframe on Wednesday, the precious metal, gold, was supported at the 1,786 level. It has formed an upward channel, which is supporting the yellow metal at 1,787. The closing of candles below the 1,790 level supports a selling bias.
On the other hand, immediate support for gold remains at 1,782, and violation of this level would expose its price to the 1,777 level. On the higher side, the resistance remains at levels of 1,799 and 1,814. The RSI and Stochastic support a selling trend today. Therefore, we need to keep an eye on the $1,786 level. A break below this may offer us a selling trade and vice versa. Good luck!