The Gold Price Forecast – Ominous Signs for XAU/USD
The Gold Price Forecast: Ominous Signs for XAU/USD
The gold price has been trading in an overbought zone for quite some time now. A number of indicators suggest that the bullish trend is about to end. In this article, we’ll take a look at the key areas that need to be addressed to protect against further weakness in the precious metal.
1.The gold price has remained above the important support level of 2.618 (blue zone), as per Fibonacci ratios, for over a week now. This has prompted many short-term traders to buy the precious metal, but it’s not clear whether the price will continue to rise higher or if the trend will be corrected further.
2.The price has been descending from the key resistance level of 3.618 (red zone), as per Fibonacci ratios, and is forming a bearish channel. This is the key area of support that will need to be breached for further downside pressure to develop.
3.The gold price has been advancing on a strong positive trend for several weeks, but has been unable to break through the important resistance level of 3.490 (red zone), as per Fibonacci percentages, due to its overbought condition. This has led to a number of short-term price swings that are likely to continue for some more time.
4.The gold price has been advancing on brisk demand from investors and private customers, as well as strong production growth. The strong economic growth in Asia has stimulated demand for the precious metal, and increased global monetary easing has contributed to further price increases.
5.Central bank buying has supported the gold price, and the eight largest central banks are on track to become net buyers in 2021. This means that they’ve been accumulating gold at a record pace and are expected to continue their strong purchasing behavior through 2022.
6.State of the World
A number of factors can influence the cost of gold, such as political instability and other regional conflicts. In addition, the supply and demand for the precious metal also play a large role in defining its price.
7.Inflation and Central Banks
The inflation rate is a big factor in determining the price of gold. The higher the rate of inflation, the higher the demand for gold. This is because it is seen as a safe haven, and investors want to store their money in a safe place.
8.Federal Reserves & the US Dollar
The Federal Reserve is expected to raise its interest rates in the near future, and this will have an impact on the price of gold. This has led some analysts to predict that the gold price will fall to US$ 1,300 by 2020.
9.Economic Data & Monetary Policy
The economic data released by the United States in the first half of this year will be key to the price of gold. The most notable upcoming release is the GDP numbers for Q1 and if they disappoint, the Fed might begin to raise its interest rates.