Like other currencies, gold price benefited from the dollar weakness brought about by the dovish FOMC statement yesterday. XAUUSD hit an intraday high of $1,739.56 before finishing the day at $1,738.23. Following remarks from the central bank that it would keep its easy monetary policy until 2022, the dollar lost ground to all of its counterparts.
Gold Price Breaks Resistance at the Falling Trendline; What’s Next?
The uptick on gold price yesterday was enough for it to break a key resistance level. On the 4-hour time frame, it can be seen that gold price has broken resistance at the falling trendline from connecting the highs of May 18 and June 2.
When you enroll in our free forex trading course, you will learn that it is not uncommon for a market to retest a previous resistance level for support. As of this writing, candlesticks have been closing above the trendline which may hint that this could be the case for gold price. If there are enough buyers in the market, we could soon see the precious metal rally to near-term resistance at $1,744.95 where it topped on June 2. If resistance at that price does not hold, the next ceiling could be at $1,764.25 where XAUUSD peaked on May 18.
On the other hand, a close below today’s Asian session lows at $1,730.44 could indicate that gold price may still retrace some more of its recent gains. It could fall to $1,720.25 where it may test the 100 SMA as well as the 61.8% Fib level (when you draw the Fibonacci retracement tool from the low of May 10 to its swing high).