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Gold Price Prediction: XAU/USD rising wedge pattern breakdown looms

2020-07-11 20:09    FXYEAH

After Gold prices hit an eight-year high on Wednesday this week, consolidation took over. Investors saw the US dollar gain traction following the majestic price action on Thursday. This created some turbulence for the precious metal especially with the ten-year United States Treasury yield diving sharply to 60-basis points in addition to ending the session at the third-lowest level in history. Besides, this was the lowest level since mid-April 2020. Panic continues to grip the US economy even as the COVID-19 curve continues to spike.

Gold technical analysis

Gold closed the session on Friday at 1,799.20 after a period of consolidation that followed a minor retreat from the eight-year high around 1,818.17. All indicators are pointing towards the dominance of sideways trading action. For instance, the RSI is motionless above the midline (50) after a dire retreat from levels within the overbought region.

On the other hand, the MACD shows that the US dollar has the potential to continue gaining traction against gold. The indicator does not only feature a bearish divergence but also grinding towards the mean line (0.00).

Consequently, the formation of a rising wedge pattern hints that a breakdown is in the offing. If support at the wedge pattern crumbles, we can expect gold to dive farther down. Support is anticipated at 1,790, the 50 SMA in the 4-hour range (1,788.13), the 100 SMA (1,774.08), 1,770 and 1,760.

XAU/USD 4-hour chart

Gold Price Prediction: XAU/USD rising wedge pattern breakdown looms Commodity News

 

 

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