Gold Price Forecast: Here are the Key Levels to Watch Next

The Gold price is tilting higher ahead of the important US retail sales numbers. XAU is trading at $1,746, which is 4% above the lowest level in March this year. Still, gold has lagged behind other assets this year. While it has dropped by more than 10%, the S&P 500 has gained by 12% while Bitcoin has doubled.

Gold vs Bitcoin and S&P 500

What happened: There are two main reasons why the gold price has struggled lately. First, many investors, especially the younger ones view the metal as old fashioned. Instead, they prefer investing in cryptocurrencies like Bitcoin, Ethereum, Cardano, and Binance Coin. Indeed, while gold has lagged, these currencies have thrived.

Second, gold price has risen because of the overall inflation expectations. In the past few months, investors have boosted their inflation hopes due to the recent US stimulus and the overall easy money policies. Indeed, the 5-year breakeven inflation rate has risen to more than 2.55%. And this week, data showed that the headline consumer inflation rose to 2.6%. In most periods, gold tends to underperform in high interest rate environment. 

5-year breakeven rate

Gold price forecast

The daily chart shows that the gold price has consolidated lately. It has barely moved in the past few days. It is also between the black descending channel that connects the highest and lowest levels since September last year. 

It is also at the same level as the 25-day and 15-day moving averages while the Average True Range (ATR) has dropped. Therefore, the outlook for gold is neutral. Any uptrend will see it testing the upper side of the channel at $1,800 while any uptrend will see it testing the lower side at $1,680.

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Gold chart

Gold price

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