Gold Price Forecast: XAU/USD turns red for the first time in a week, eyes more losses

Gold is reversing its recent run to three-week tops of $1815, in the red for the first time in a week. FXStreet’s Dhwani Mehta explains why downside appears more compelling for XAU/USD.

See – Gold Price Forecast: XAU/USD to advance nicely towards the 200-DMA at $1829 – Credit Suisse

XAU/USD has recalled the sellers

“The resurgent demand for the US dollar amid risk-averse market conditions, in light of rising coronavirus cases in Asia and the Fed’s tapering expectations, weighs negatively on the USD-denominated gold. Further, a recovery in the US 10-year Treasury yields from five-month lows also collaborates with the downside in the non-yielding gold.” 

“Later today, the US Jobless Claims data will be eyed for fresh dollar trades. In the meantime, the dynamics in the yields and the greenback will continue to play out, investors await fresh covid updates and ECB’s decision on its inflation target.”

“On the hourly chart, gold price confirmed a symmetrical triangle breakdown on a sustained breach of the $1800 support. The bears extend their control, as gold price closes in on the upward-sloping 100-Hourly Moving Average (HMA) at $1794. If the selling pressure intensifies, a test of the July 6 low at $1790 remains on the cards.”

“If gold bulls manage to recapture the key resistance around $1802-$1803 (21, 50 SMAs confluence), then the further upside could open towards the triangle resistance at $1806. Acceptance above the latter would invalidate the downside breakout of the triangle, calling for a fresh upswing towards $1815.”