Gold price finished yesterday’s trading higher on the back of dollar weakness sparked by US protests and disappointing US data. XAUUSD bounced from its intraday lows at $1,727.00 and closed the day at $1,739.24, higher than where it opened at $1,734.85.
Protests supporting the Black Lives Matter movement have been happening across the country. Some market participants are worried that US President Donald Trump may soon announce Martial Law after he said that he would deploy active US military personnel to US cities. Consequently, this news incited concerns about political instability.
It also did not help the US dollar that the US ISM manufacturing PMI report for May printed at 43.1 versus the 43.5 forecast.
There are no reports from the US due today. With that said, market sentiment will likely dictate price action on XAUUSD. If risk aversion continues on US protests, we may just see gold price gain more momentum. Alternatively, more peaceful developments could push XAUUSD lower.
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Gold Price Outlook
On the 4-hour time frame, it can be seen that gold price has made higher lows after a series of lower lows. Consequently, an inverse head and shoulders pattern has formed. When you enroll in our free forex trading course, you will learn that this is a bullish reversal indicator. As of this writing, XAUUSD is trading near its neckline resistance around $1,743.25. A strong close above this price could mean that gold price could rally to $1,764.90.
On the other hand, a close below yesterday’s low at $1,727.00 could invalidate the chart pattern. It could imply that there are still sellers in the market who could push XAUUSD to $1,696.17.
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