Gold price has been in the red for five straight weeks as a strong US dollar continues to weigh on the precious metal and the broader commodities class. In the new week, the trend will likely continue despite the probable relief rally. This forecast is founded on the profit-taking mood that will likely mark the start of the week after the US dollar hit a fresh 20-year high in the past week.
The US dollar rallying remains the key bearish driver of gold price. On Thursday, the dollar index, which tracks the value of the greenback against a basket of six major currencies, rose to a fresh 20-year high at $109.33. The surge was a reaction to the higher-than-expected US CPI numbers. As indicated by the US Labor Department, inflation in the country hit a 41-year high of 9.1% in June compared to the analysts’ estimates of 8.8%.
The US dollar is set to continue on its uptrend into the new week. Even so, the profit-taking mood may offer gold price the much desired relief. On Friday, the greenback eased on its rally to hit an intraday low of $107.89. As the market enters the new week on the same mode, the precious metal may have found its short-term support.
Gold price technical analysis
As shown on a four-hour chart, gold price remains below the 25 and 50-day exponential moving averages. Based on these technical indicators, coupled with the fundamentals, I expect it the bearish outlook to persist in the short term.
Gold price will likely enjoy some support around the psychologically crucial level of 1,700; 1,697.24 to be specific. Subsequently, it may remain range-bound in the ensuing sessions with 1,720.47, which is along the 25-day EMA, being a resistance level worth watching. Past the range’s lower border, the bears will have an opportunity to push it to 1,680.14. However, a rebound above the aforementioned resistance zone will invalidate this bearish forecast.