XAU/USD Forecast: Testing The Critical Support. Shall The Bulls Leave The Game?

New York (June 18)  Fundamentals: Gold prices are under a strong selling pressure weighted down by surging momentum in the US dollar as monetary policy between the US and Europe continue to diverge.

Despite hawkish sentiment from FED, the gold price was able to hold above the psychological support level of 1300 USD. But Friday was the breaking point. After the big breakdown in the EUR/USD exchange rate yesterday, the positively-correlating gold was always going to struggle to sustain its gain.

I believe that we will see further softness in gold. However, since the uncertainty remains high in the face of a growing trade war between the US and China, I plan to use this bearish movement as a buying opportunities.

The main question is "when/where to buy?"

I do not think we will face a major sell-off in gold. No major catalysts to push the prices higher, but there are factors which may change the negative sentiments soon especially as the Trump administration approved $50 billion in new tariffs on Chinese imports. It is expected that China will again retaliate with its own tariffs on US imports, with agriculture products in the crosshairs. The political environment will keep Gold Bulls alive.

One more thing to keep eyes on is the FED’s focus on global trade and economic issues. If the Fed becomes really concerned about trade issues that would have very positive effects in XAU/USD.

Technicals:

XAU/USD ended the week 1278.45 below EMA 50, EMA 100 and EMA 200 in daily charts.

As seen in the above Daily Chart, the price is testing the trend line support. We see a double bottom pattern as well. A real critical support. This level is the EMA 200 support of the weekly chart as well.

1281.30 MM 2/8 Pivot Major Pivot/Reverse. A daily closing below 1282 will carry the prices 1265 USD. This is the level where the bulls will leave the game for a while.

In the smaller chart time frames, 1273 appears to be the key level before 1265.

On the upside; 1285 and 1289 .47 are the possible pullback levels.

Conclusion:

The two major reports to be released next week is housing construction data for May and regional manufacturing data from the Philadelphia Federal Reserve. Powell and Draghi will speak t a European central bank conference next week, however, markets are not expecting any major surprises.

We will publish our trade idea for premium members later today, Our main – midterm – strategy is to look for potential buying opportunities. 1265 and close above 1289 are our key levels to buy.

If you look for a short-term trade opportunity; sell below or buy above 1281 ( H4 closings ).

Investing.com

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