Gold Price Forecast – Bears’ Dominance Might Continue


Gold prices continued to decline even today. Despite the price drops since Wednesday, the XAU/USD pair continues to uphold stronger momentum.

Latest US-Iran News

Meantime, Thursday updates on the US-Iran conflict seem to be a positive one. The US House of Representatives has voted to cease further attacks against Iran. The resolution passed 224-194, with nearly all Republicans opposed.

However, Ali Alfoneh, Senior Fellow at the Arab Gulf States Institute in Washington, sees no current end to the US-Iran disputes. He says, ā€œIā€™m not expecting further direct attacks from Iran. We are likely to see more indirect responses through proxies.ā€

US Bond Yields

Meantime, as I look over the 3-month Treasury Bill Yield and 10-year Bond Yield, things appear supporting the gold prices.

Treasury Bond Yields
Treasury Bond Yields (Source: US Dept. of the Treasury)

Most of the time, Gold prices remain inversely proportional to the Bond yield changes. Now, here, as shown in the above image, the long term yields seem to outperform the short term ones. Such a situation suggests slight growth for gold prices in the coming sessions.

Meantime, at around 10:28 GMT, the US Dollar Index was found to trade near 97.51 level, heading upside.

Technical Analysis

1-Day Chart

Though the XAU/USD pair has declined in the last few sessions, it continues to trade, adhering to a 4-day old slanting support line. The moment it breaks down this pivotal support, next support lines stalled near $1542.614, and $1532.30 will get activated.

Also, the Stochastic Oscillator was indicating ~60 levels, showing the resilient nature of the bulls.

XAU/USD 1 Day 10 Jan. 2020
XAU/USD 1 Day 10 Jan. 2020

Needless to say, the bears continue to stay on, relying on the overhead Parabolic SAR. Quite notably, the Parabolic SAR was hovering near $1608.9 level as compared to the gold prices trading near $1550. Hence, I can see a considerable gap between the two, suggesting drops to continue if the aforementioned supports get disturbed.

4-Hour Chart

On the 4H chart, the XAU/USD pair was testing the 50-day SMA from the top. It might soon cross below the 50-day SMA, in order to justify the lower boundary of the Bollinger Bands. However, such a move would mean a negative trend in the short term.

XAU/USD 240 Min 10 Jan. 2020
XAU/USD 240 Min 10 Jan. 2020

The MACD line and signal line were heading towards the south with the red histograms pointing downwards. So, I foresee the bears to dominate the yellow metal prices for the next few sessions. A quick reversal in the prices, taking it back to the 7-year high territory, seems doubtful.