Gold Price Outlook: XAU/USD May Struggle to Rally Further as Supportive Trend Breaks

GOLD FINDING LIFE DIFFICULT AT RARIFIED LEVELS

The supportive trend that helped gold hit a near eight-year high is beginning to break down and the precious metal may struggle to make a fresh peak in the short-term. While the weak US dollar should prevent any sharp sell-off in gold, a combination of a broken trend and the formation of a bearish shooting star candle may see the price slip back into support. US Treasury yields, a driver of gold price action, remain anchored around multi-year lows and while this remains the case, any sell-off in gold will remain limited. Renewed COVID-19 fears and geopolitical worries will also act as prop for gold.

While the break of the uptrend is clear to see, it will need to be confirmed over the next couple of days. Also visible on the daily chart is a shooting star candle made on Monday. For this to be confirmed, today’s candle must not break above yesterday’s high print and should close below yesterday’s close. If this negative signal is confirmed, a re-trace back through the 20-dma and recent low prints all the way back down to the 50-dma and prior resistance at $1,747/oz. may be seen.

For bullish price action to continue, gold needs to close yesterday’s high at $1,814/oz. and the July 8 high at $1,818/oz. Above here, the lack of any price action would suggest that $1,921/oz. would be the longer-term target. The risk/reward favors bullish traders but there may well be better levels to look for.

GOLD DAILY PRICE CHART (FEBRUARY – JULY 14, 2020)

What is your view on Gold – are you bullish or bearish??

https://www.dailyfx.com/forex/...