Gold price action on the XAUUSD pair is now consolidating intraday, as markets attempt to stabilize following yesterday’s intraday fall that sparked additional safe-haven buying on the yellow asset. Gold price briefly touched 1700 in yesterday’s trading session but is now trading lower on the day at 1661.42 as at the time of writing.
The US Dollar continues to retain a bearish bias for the day as traders have once more increased bets of an additional 50 Bps rate cut by the Fed when they meet in 2 weeks. The US Dollar index is down 1% and is now trading at near 18-month lows. This situation ensures that the XAUUSD retains a bullish bias for the day, as markets may be looking for dip-buying opportunities.
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Technical Outlook for XAUUSD
Gold price was unable to push beyond the 0% retracement level to initiate an extension move beyond 1700. Today, price continues to trade between the borders of an evolving short-term falling wedge, which could have further bullish implications for gold price. However, intraday support lies at 1651.95 (cluster of highs seen last week). This is also where the price found support on the wedge’s lower border.
An upside extension from this support is expected to find resistance at the wedge’s upper border. Failure to break above it could result in continuing consolidation within the pattern for the time being. If price breaks above the wedge, upside continuation of the uptrend, could take gold prices towards 1680 initially, with the 1700 psychological resistance lurking ahead.
Profit-taking is a possibility, and if this ends up forcing gold price below 1651, then the next support could be at 1632.16 (23.6% Fibonacci retracement level from the 11 November 2019 swing low to the 6 March 2020 swing high). This move would also invalidate the wedge.
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