Gold Price Forecast – Rising Wedge Pattern In Play

Gold price fell under pressure on the return of risk appetite and struggled despite a weaker dollar.

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Gold prices continued to trade sideways despite the downfall in the Greenback. After touching the 98.5 apex level on Nov’ 29, the USD Index has dropped to near the 96.87 level today. The index declined as US bond yields soared. However, the yellow metal didn’t gain over a weaker Greenback as it was weighed by risk sentiment. Instead, gold prices appeared to deviate between 1444.96/1485.97 range level.

US-Sino Trade Deal Updates

Finally, the US has reached a “deal in principle” with China on trade. Though the official announcement remains underway, optimism has already developed across the trade deal. Speculations suggested that the US offered to cut the existing tariffs on China by 50% and suspend the new tariffs in order to accomplish the “Phase 1” trade deal.

Meanwhile, even if Washington plays around with new tariffs, then that would simply invoke fresh retaliations from the counterpart. In that case, China might also pause trade talks until after the US Presidential Elections expected by Nov’ 2020.

UK Election Status Quo

UK General Election results showed that Boris Johnson’s Conservative Party has grabbed an impressive majority in the Parliament. Now, one can expect the UK to leave the EU anytime as soon as the Withdrawal Agreement gets ratified.

Following the election outcome, the Sterling pound pair rallied 2.33% higher, briefly scaling the 1.3500 handle before paring some gains.

Technical Analysis

1-Day Chart

The upside for XAU/USD pair seems completely occupied by multiple major barriers. The most significant obstacle among them is the overhead red Ichimoku Cloud, which is spread up to 1500 level. Meanwhile, a major counter trendline and a strong resistance level continued to exert pressure over the gold bulls.

XAU/USD 1 Day 13 Dec' 2019
XAU/USD 1 Day 13 Dec’ 2019

Any price action above the aforementioned resistance region would immediately activate the 100-day SMA, hovering near 1489.44. And, with hardly a few signs of weaknesses, the probabilities for a potential breakout in the medium term stays intact. Also, the Stochastic Oscillator is higher than 50, revealing a good amount of momentum in the pair.

4-Hour Chart

On the 4-Hour chart, the pair appeared to move successfully above the Ichimoku Clouds. However, a few bearish signals can not be overlooked.

I can see the price chart forming a bearish rising wedge pattern since Nov’ 08. So, anytime in the near term, we can expect a slight breakdown in the price if the lower side of the wedge gets tested.

XAU/USD 240 Min 13 Dec' 2019
XAU/USD 240 Min 13 Dec’ 2019

Nonetheless, the MACD line and the Signal line travel well above the zero line of the MACD indicator, sustaining bullish prospects.