Gold Price Forecast – Stuck Inside Ichimoku Clouds


Gold markets remain under consolidation since Jan. 09. Notably, a sturdy resistance handle near $1561 has put a cap on the yellow metal’s price movements. However, a breakout of this aforementioned barrier might open up the door to the upside for gold prices.

Interim, after the accomplishment of the US-Sino Phase 1 deal, there have been fewer updates from the trade dispute front. Also, news headlines lacked updates on significant global cues. As of result of which, the overall gold markets remained choppy and less volatile in the last few sessions.

US Dollar Index

The Greenback had recently thrashed above a robust two-month-old counter-trendline. Despite that, bears continued to set the powerplay for the dollar. Also, the hangover of the recent “Death Cross” was prevailing in the price actions of DXY, showcasing a choppy performance.

DXY 1 Day 22 Jan. 2020
DXY 1 Day 22 Jan. 2020

Nevertheless, the overall momentum remains untapped near the overbought territory, pleasing the near term bulls.

Recent IMF Growth Outlook

A few days back, the International Monetary Fund (IMF) came up with its global economic outlook. Below is the snapshot of the growth projections for the world economies.

IMF Growth Outlook 2020
IMF World Economic Growth Outlook

I see that the IMF is expecting an economic slowdown in the US in the coming years. IMF expects the US economy to degrow by 0.3% each year until 2021.

However, I think, with the US-Sino phase 1 deal already signed, and optimism around Brexit, things might recover with time. Gradually, the US Dollar might also gain strength, exerting downward pressure on the gold prices.

Technical Analysis

1-Day Chart

Despite a bearish MACD crossover, the XAU/USD pair continued to trade in the upper region of the Bollinger Bands. The gold markets have been choppy in the last few sessions. However, at present, I don’t see any substantial weakness in the pair.

XAU/USD 22 Jan. 2020
XAU/USD 22 Jan. 2020

Meantime, the Parabolic SAR continued the downward motion, staying above the XAU/USD pair.

Anyhow, even a single move, crossing below the center line of the Bollinger Bands, would immediately activate the gold bears. Also, the below-lying SMA conflux consisting of 50-day, 100-day, and 200-day SMA remained at the bottom, preventing potential drops.

4-Hour Chart

On the 4H Chart, the XAU/USD pair seems to have got stuck inside the overhead red Ichimoku Clouds. Here, these Kumo Clouds are acting as a perfect resistance region, attempting to disallow bulls to the upside. However, the lagging span of this technical indicator was positioned marginally above the pair, shaking hands with the gold bulls.

XAU/USD 240 Min 22 Jan. 2020
XAU/USD 240 Min 22 Jan. 2020

Needless to say, the Stochastic Oscillator was clinging near 50 levels, withholding the average momentum level required for an unexpected bull run.