Gold Price Forecast: XAU/USD Extends Slide To $1,980 Amid Dollar Strength
Photo by Dmitry Demidko on Unsplash
- The price of gold resumed downside momentum on Monday with a fall to the $1,980 area.
- The US dollar rises across the board, boosted by higher US yields.
The price of gold resumed downside momentum on Monday, breaking under the $1,990 level. XAU/USD bottomed at $1,980, reaching the lowest level in a week. It has been seen hovering near $1,980, almost $60 from last week’s top. The reversal in gold gained momentum amid a rally in the US dollar and higher US yields.
Expectations that the Federal Reserve will raise interest rates again in May pushed yields to the upside. The US 10-year yield rose to 3.60%, the highest level since late March. The US dollar index appears to be advancing for the second day in a row, and is above 102.20.
Data released on Monday in the US showed a sharp rebound in the Empire Manufacturing Index in April to 10.8 from -24.60, surpassing expectations of -18.0. The numbers contribute to the expectations of one more rate hike from the Fed.
On the daily chart, XAU/USD has been trading around the 20-period Simple Moving Average at the $1,990 area. If the yellow metal consolidates clearly below this point, the outlook would point to an extension of the correction. On the contrary, if gold manages to remain above and retakes the $2,005 level, bulls may return. The next area of resistance is seen around $2,025.
XAU/USD Daily Chart
XAU/USD Technical Levels
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