Gold Price Forecast: Recoveries likely be capped as 20-day EMA slopes lower
Gold price (XAU/USD) trades 0.8% higher to near $4,110 during the European trading session on Thursday. The precious metal gains as the US Dollar (USD) is down despite a slight improvement in expectations that the next monetary policy move by the Federal Reserve (Fed) will be on the upside.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 100.95 even after recovering over half of its early losses.
According to the CME FedWatch tool, the odds of the Fed raising interest rates at least once this year have increased to 83.4% from almost 78% recorded a week back.
Hawkish Fed prospects have increased as oil prices have bounced back strongly due to renewed Middle East tensions.
Technically, higher interest rates by the Fed bode poorly for non-yielding assets, such as Gold.
Investors worry that renewed Middle East hostilities will likely be prolonged, as the US military forces have attacked Iranian infrastructure. Earlier in the day, Iranian state media reported that multiple US artillery shells struck a railway bridge west of Aghala in Golestan, triggering several explosions.
On Wednesday, United States (US) President Donald Trump said on the sidelines of the North Atlantic Treaty Organization (NATO) summit that our military forces might hit Iran again and would also attack the power and water infrastructure of the nation, if needed.
Gold technical analysis
XAU/USD trades higher at around $4,110, but maintains a bearish near-term tone as it holds beneath the 20-day exponential moving average (EMA) at $4,153.16. The metal has been unable to reclaim this dynamic barrier, keeping the broader recovery attempts capped, while the Relative Strength Index (RSI) at 43.30 remains below neutral, hinting at subdued bullish momentum rather than a decisive rebound.
On the topside, immediate resistance is defined by the 20-day EMA at $4,153.16, and a sustained break above this level would be needed to ease current downside pressure and open the way for a more constructive bias. Further, the yellow metal could advance to near $4,200.
Looking down, the precious metal could slide to the October 28 low at $3,886.62 if it slides below the June low at $3,941.76.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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