Gold Price Analysis & Forecast

Technical Analysis

Gold bulls attack a six-week-old horizontal resistance area amid bullish MACD.

The commodity needs to cross the $1,760 to extend the corrective pullback from the multi-day low flashed earlier in the week.

Following that, a convergence of 100-SMA and a horizontal area from late June, surrounding $1,790-91, as well as the $1,800 threshold, will challenge the gold buyers before giving back controls to them.

On the flip side, an ascending support line from Tuesday, near $1,747, followed by $1,738 and $1,718, challenge gold sellers ahead of directing them to the $1,700 psychological magnet.

Should the gold bears keep reins past $1,700 the yearly low near $1,676 will regain the markets attention.

Will The Gold Shine in September？

As the chart below shows, the price of gold plunged 10% in Q1 2021. Then, it rebounded 4.3% in the second quarter, but it was not enough to offset the blow from the first three months of the year. In July, the price of gold jumped 3.6%, although it retraced most of that increase in August (it decreased 2.1% in a single day – Aug. 6). So, gold prices declined more than 6% year-to-date.

Unfortunately, there is potential for further declines. After strong July‘s nonfarm payrolls, the Fed has no excuses not to start tapering of its quantitative easing. What’s more, the current levels of the real interest rates are very low, so they are likely to normalize somewhat later this year.

Luckily, an abrupt taper tantrum similar to the one from 2013 is not likely to happen again. Moreover, a bit later either the post-tightening recession or inflation running out of control could make gold shine again. After all, inflation is well above the Fed‘s target, while the real yields will likely remain negative for a long period. These factors should provide support for gold over a longer horizon, but investors shouldn’t downplay the upcoming tightening cycle and rising interest rates.

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