Technical Analysis

GOLD Price Analysis – Aug 16, 2023

By LonghornFX Technical Analysis
Aug 16, 20233 min
Signal 2023 05 25 122622 002

Daily Price Outlook

Gold price (XAU/USD) failed to stop its previous downward trend and is currently hovering around the $1,901 mark on Wednesday. However, the positive report regarding United States Retail Sales has unexpectedly led to concerns regarding potential tightening of the US Federal Reserve's monetary policy. This, in turn, has exerted downward pressure on the gold.

Another contributing factor to the XAU/USD decline is the recent sluggish performance of riskier assets, including equities, currencies from the Antipodean region, and various commodities. Hence, the combined effect of these downward trends in different sectors appears to have generated a challenging situation for the gold market.

US Economic Strength and Dollar Surge Impact Gold's Prospects

According to the recent news, the US Retail Sales data for July came in stronger than expected. It showed a 0.7% increase, surpassing the earlier reading of 0.3% and even beating the predicted 0.4% by the market experts. This is a sign that the US economy is doing better and getting stronger. This could lead to speculations that the US Federal Reserve could decide to make its monetary policy a bit tighter during their September meeting. If that happens, it might not be as attractive to invest in things like Gold.

Meanwhile, the broad-based US dollar is rising, driven by positive economic data from the United States. This uptrend in the DXY could impact Gold's price, given its inverse relationship with the dollar. Gold, often a safe haven in uncertain times, might lose some shine as the dollar strengthens. This could prompt investors to explore more enticing alternatives, potentially leading to reduced demand for Gold and influencing its price in the market.

China's Economic Concerns Put Pressure on Gold's Value

Furthermore, concerns over China's economic might are pressuring Gold's value. China's central bank's surprise move to cut one-year MLF loans by 15 basis points to 2.50% from 2.65% could intensify downward pressure on Gold prices.

In the meantime, China's July Retail Sales grew only 2.5%, missing the expected 4.8% and the previous 3.1%. Industrial Production also fell short at 3.7%, below the forecasted 4.5% and the prior 4.4%. These factors could contribute to Gold's uncertain value.

Looking ahead, investors watch US July Industrial Production and FOMC meeting minutes. Meanwhile, the signs of future US rate hikes could push Gold below $1,900, as higher rates attract alternatives, affecting Gold's appeal.

GOLD Price Chart – Source: Tradingview
GOLD Price Chart – Source: Tradingview

GOLD (XAU/USD) - Technical analysis

During the previous trading session, gold displayed a distinct downward trajectory, nearing our anticipated target of $1,892. This decline followed a period of fluctuating behavior, during which the price tested a pivotal resistance at $1,913, only to retreat in a bearish manner.

This reinforces the ongoing bearish trend in intraday and short-term perspectives, clearly delineated within the chart's evident bearish channel. We project a further descent toward the $1,874 mark.

Given these factors, our forecast remains bearish for the forthcoming period, with the EMA50 providing additional support for this stance.

This outlook hinges on the price's consistent positioning below the $1,913 threshold. For today, we anticipate a trading corridor with support at $1,885 and resistance capped at $1,915.  



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