Gold (XAUUSD) Price Forecast: Gold Price Targets $4850.68–$5028.04 Resistance Cluster

Spot Gold Rises for a Fourth Straight Session but Resistance Is Dead Ahead

Spot Gold is higher for a fourth straight session on Wednesday as the market continues to recover from its recent nine day plunge to a four-month low. The price action is being driven by a mix of currency moves, geopolitical developments, and shifting expectations around interest rates. I think that although these factors are creating a more balanced outlook for gold, they’re also creating a more uncertain outlook.

At 18:51 GMT, XAUUSD is trading $4987.55, up $51.47 or +1.04%.

Technical Outlook

Technically, the market is still in a downtrend according to the main swing chart because of its lower-top, lower-bottom formation. The major moving averages are providing a mixed picture with the 200-day MA providing solid support at $4132.31 and the 50-day MA potential resistance at $4955.64. The minor trend is up, creating the current upside momentum.

The long-term range I’m working with is $3886.46 to $5602.23. Gold is currently testing the upper or 50% level of its retracement zone at $4744.34. Support is the 61.8% level at $4541.88. Overtaking this level on Tuesday triggered this current acceleration to the upside.

The intermediate range is $5602.23 to $4099.12. Its retracement zone at $4850.68 to $5028.04 is the current upside target. Inside this zone is the 50-day moving average at $4955.64.

Given this cluster of potential resistance levels and the current downtrend, I’m looking for sellers to reemerge on a test of this area. The sellers could be taking profits or initiating new shorts. We won’t know until we look at the open interest.

Watch the order flow and price action on a test of $4850.68 to $5028.04. Trader reaction to this area will likely determine the next major move.

Dollar Weakness and Risk Sentiment Are Doing the Heavy Lifting

Fundamentally, one of the biggest drivers today is the U.S. Dollar, which is down for a second straight session. The drop in the dollar corresponds with hope that the tensions in the Middle East could ease and dovish comments from Fed Chair Powell about the chances of a rate hike. In addition to the weakness in the dollar, improving risk sentiment is also supporting higher gold prices. Higher stock prices and lower Treasury yields too are reflecting a generally more optimistic tone across the financial markets.

Oil Is Still Elevated and That Cuts Both Ways for Gold

Gold buyers are also keeping an eye on crude oil prices. Although crude has pulled back from recent highs, prices remain elevated. The key here is oil’s influence on inflation. Higher inflation is supportive for gold, per se, but when it pushes yields higher or rate hike expectations, it could act as a headwind rather than a tailwind.

This Is Still an Interest Rate Trade, Not a War Trade

Looking ahead, gold is being pulled in different directions, with dollar weakness and geopolitical risks offering support, while improving market sentiment and uncertain rate expectations limit the upside.

Stripping away everything, I think we’re still in an interest rate driven market and not in a war driven trade. We saw that in late January when gold topped at its record high after the Fed balked at a March rate cut and again at the start of the war when elevated oil prices took rate cuts off the board and replaced them with rate hike expectations.

Looking at a combination of the news and the daily chart, I’d have to say that $4850.68 to $5028.04 is the zone to watch and start watching the headlines when it gets there.

More Information in our Economic Calendar.