MTS Help Center

Gold Price Forecast: XAU/USD set to test $1850 amid bullish technical setup, US PCE eyed

 

Gold price rallied nearly $23 on Thursday to reach the highest levels since July 15 at $1732, as the bulls got a fresh boost after piercing through the 200-Daily Moving Average (DMA) at $1821. Gold price settled the day at $1828, well above the 200-DMA.

 

Next of relevance for gold traders remain the Fed’s most preferred inflation gauge, the Core PCE Price Index. However, the inflation data may have little impact on the markets, as Fed Chair Jerome Powell dismissed higher inflation while the taper timing announcement is likely to be delayed after July’s dovish policy statement.

 

Gold Price Chart - Technical outlook

 

 

Gold price has carved out a potential bull flag formation on the four-hour chart, considering the ongoing consolidation that followed Thursday’s upsurge.

The bulls need a four-hour candlestick closing above the falling trendline resistance at $1831.

The upside breakout would open doors for a test of the $1850 psychological level. Ahead of that the July 15 high of $1834 could challenge the bullish commitments. 

The Relative Strength Index (RSI) has eased out from the overbought region to now trade at 66.95, suggesting that the next upswing could be in the offing.

The 21-Simple Moving Average (SMA) and 100-DMA bullish crossover also adds credence to the additional upside.

On the flip side, if the pullback extends below the falling trendline support at $1826 on a sustained basis, then a drop towards the 21 and 100-SMAs confluence at $1809 cannot be ruled out.

 

 

Next of relevance for gold traders remain the Fed’s most preferred inflation gauge, the Core PCE Price Index. However, the inflation data may have little impact on the markets, as Fed Chair Jerome Powell dismissed higher inflation while the taper timing announcement is likely to be delayed after July’s dovish policy statement.

 

Reference: FXStreet