Gold Price Forecast XAU/USD – In Position to Post Fifth Consecutive Weekly Gain

Comex gold futures are edging higher on Friday, but off their intraday high as traders wrestle with rising Treasury yields and a firm U.S. Dollar.

The market continues to hover near its highest level since late April while on track for a fifth straight weekly gain. The catalysts supporting gold have been the anticipation of slower rate hikes from the U.S. Federal Reserve and fears of a possible recession.

At 12:25 GMT, February Comex gold is trading $1929.30, up $5.40 or +0.28%. Rollover to the April futures contract on Monday. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $179.88, up $2.80 or +1.58%.

Supported by Softer Fed Outlook

Ahead of the Fed’s Jan. 31 – Feb. 1 policy meeting, Fed funds futures are pricing in a smaller 25-basis-point interest rate increase by the U.S. central bank in February, after recent economic data showed signs of cooling inflation.

Despite being in a strong uptrend, prices have been struggling to breakout to the upside with several Fed policymakers have recently signaled they will push on with more interest rate hikes, with a few supporting a top policy rate of at least 5% to curtail inflation despite signs the economy is slowing.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at $1939.00 will signal a resumption of the uptrend. A trade through $1898.60 will change the main trend to down.

Gold is trading on the strong side of a long-term Fibonacci level at $1915.30, making it support. The nearest major resistance is the April 18 main top at $2030.00.

Daily Swing Chart Technical Forecast

Trader reaction to $1923.90 is likely to determine the direction of February Comex gold on Friday.

Bullish Scenario

A sustained move over $1923.90 will indicate the presence of buyers. Taking out the intraday high at $1939.00 will indicate the buying is getting stronger. This could trigger the start of an eventual move into the next major target at $2030.00.

Bearish Scenario

A sustained move under $1923.90 will signal the presence of sellers. The first downside target is $1915.30. If this fails then look for the selling to possibly extend into the main bottom at $1898.60.

Side Notes

A close under $1923.90 will form a closing price reversal top. This won’t change the main trend to down, but if confirmed, it will shift momentum to the downside and could trigger the start of a 2 to 3 day correction.