Gold Price Forecast – Expecting a Shorter Bear Trend


Gold markets continue to stay choppy. However, on the daily chart, I foresee a potential downside post breakage of $1551 support level.

Fundamental Side

The primary drivers for the gold prices have had remained the global cues like US-Sino, Brexit, and US-Iran issues. With the lack of fresh data on the mentioned key global cues, the yellow metal continued to keep hold onto its accumulated gains. Currently, gold prices appear to have reached their epitome.

Needless to say, though there was a slight correction for the last few sessions, the XAU/USD pair tends to cling near its 7-year high.

Also, the gold prices have steadied as tensions between the US and Iran eased. Next up for this week would be the signing of the US-Sino Phase 1 deal. On proper deal accomplishment, the XAU/USD pair might nudge lower and even cross below $1551 mark.

In the meantime, the US Dollar Index was testing a major counter trendline. Greenback had tried multiple times in Dec. 2019 to make a move above the aforementioned resistance.

USD Index 1 Day 13 Jan. 2020
USD Index 1 Day 13 Jan. 2020

However, even if the Index makes a triumphant move this time, then that would activate the overhead resistance region. This resistance region is made up of SMA conflux comprising of 50-day SMA, 100-day SMA, and 200-day SMA.

Technical Analysis

1-Day Chart

Here, the lagging span line that lies above the trading entity confirms an uptrend as the primary trend. Quite astonishingly, the gold prices have displayed a strong Kumo breakout, marking the start of 2020. The conversion line stays above the pair with the base line below it, creating a complex overview.

XAUUSD 1 Day 13 Jan. 2020
XAUUSD 1 Day 13 Jan. 2020

Anyhow, to get an evident downtrend hint, the XAU/USD pair must cross at least below $1534 level where the base line is instilled.

Another major concern around the pair is its declining momentum as Stochastic Oscillator was indicating ~61 levels.

4-Hour Chart

On the lower time scale, the pair appears to trade inside robust green Ichimoku Clouds. This might be the probable reason why the prices have stabilized in the shorter term. However, the bulls might remain less reactive amid a lack of sufficient momentum.

XAUUSD 240 Min 13 Jan. 2020
XAUUSD 240 Min 13 Jan. 2020

From the upper side, I notice the Parabolic SAR, approaching the pair. So, as the Parabolic SAR reaches near to the XAU/USD pair, chances of it moving under the pair remain higher. In such a case, probabilities of a potential short term trend reversal remain in the cards.

Meantime, on the downside, significant support levels remain stemmed near $1524.46 and $1515.14 levels.