Gold Price Hesitates But Further Gains Seem Likely

Key Highlights

  • Gold price formed a solid support near $1,485 and climbed above $1,515 against the US Dollar.
  • There was a break above a major bearish trend line at $1,506 on the 4-hours chart of XAU/USD.
  • The US Consumer Confidence declined sharply from 134.2 to 125.1 in Sep 2019.
  • The US New Home Sales could increase 3.9% in August 2019 (MoM), better than the last -12.8%.

Gold Price Technical Analysis

Earlier this month, gold price started a major downside correction from $1,557 against the US Dollar. It broke many supports before forming a solid support base near $1,485 in the past two weeks.

Gold Price Technical Analysis

The 4-hours chart of XAU/USD indicates that the price started a fresh increase from the $1,483 swing low. There was a break above many important resistances near the $1,500 and $1,505 levels.

Moreover, there was a break above a major bearish trend line with resistance near $1,506 on the same chart. It opened the doors for more gains above $1,510 and the 100 simple moving average (4-hours, red).

The price even surpassed the 50% Fib retracement level of the last major decline from the $1,557 high to $1,483 swing low. It seems like the price is back in an uptrend and it could continue to rise.

An immediate resistance is near the $1,540 level, plus the 76.4% Fib retracement level of the last major decline from the $1,557 high to $1,483 swing low. If there is an upside break above $1,540, the price could accelerate towards $1,550 and $1,555.

Conversely, if it fails to surpass $1,540, there could be a downside correction. An initial support is near $1,510 and the 100 simple moving average (4-hours, red). Any further losses might push the price to $1,500.

Fundamentally, the US Consumer Confidence report for Sep 2019 was released by the Conference Board. The market was looking for a minor decline from 135.1 to 134.1.

The actual result was disappointing, as there was a sharp decline in the Consumer Confidence to 125.1. Moreover, the last reading was revised down from 134.2 to 134.1.

The report added:

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased from 176.0 to 169.0. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – declined from 106.4 last month to 95.8 this month.

Looking at EUR/USD, the pair is facing a strong resistance near the 1.1080 and 1.1100 levels. On the other hand, GBP/USD remains well supported above the 1.2400 and 1.2380 levels.

Economic Releases to Watch Today

  • Non-Monetary Policy ECB Meeting.
  • US New Home Sales for August 2019 (MoM) – Forecast +3.9% versus -12.8% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

Aayush's latest posts