Gold Price Forecast: XAU/USD erases gains, back under pressure below $1820
- Gold reversed from two-day highs and is back near weekly lows.
- US dollar rises across the board following comments from Portugal.
Gold prices dropped sharply during the American session, erasing daily gains. XAU/USD peaked at $1833, the highest level in two days and then turned lower, falling to $1814, slightly above the daily low of $1811.
The reversal took place amid a rally of the US dollar. The DXY jumped toward 105.00, the highest level in a week. It is rising for the second day in a row as market concerns remain in place.
US yields eased on Wednesday even as central bankers offered a hawkish tone from Portugal where the European Central Bank is having its annual meeting. Fed Chair Powell warned about the risk to the economy from higher interest rates; however made it clear the biggest risk is losing price stability. ECB President Lagarde said they will consider the “anti-fragmentation” tool at the July meeting.
Short-term outlook
The bounce from $1811 weakened before reaching at $1835, a short-term downtrend line. A break above the mentioned level should open the doors to more gains, targeting initially $1845 and then levels above $1850.
While under $1835 the outlook is biased to the downside, with rising risks of more losses below the 20-Simple Moving Average in four-hour charts (currently at $1825).
XAU/USD is testing $1815 and below attention would turn to $1811 (June 29 low) and then to $1804 (June 14 low), the last defense of $1800.