Weekly Gold Forecast - 17 July 2017

17 July 2017 7:13:30 AM

By: DailyForex.com

Gold prices settled at $1228.82 an ounce on Friday, gaining 1.35% on the week, as the dollar fell after weaker-than-expected U.S. inflation data reduced the market’s expectations for a Federal Reserve interest rate hike by September. In a congressional testimony last week, U.S. Federal Reserve Chair Janet Yellen sounded a more dovish tone on monetary policy. Yellen said that inflation should rebound, but the central bank could alter policy if softness persisted.

After hitting a four-month lows on Monday, the precious metal was also due for a short-covering. XAU/USD found enough support in the 1208/5 area and ultimately tried to climb above the 4-hourly Ichimoku clouds on Friday. From a chart perspective, trading below the daily clouds suggest that the risk of a fall to the 1197/4 zone still exists. Negatively aligned Tenkan-sen (nine-period moving average, red line) and Kijun-sen (twenty six-period moving average, green line) lines and the Chikou span (closing price plotted 26 periods behind, brown line), which resides below the daily clouds, support this theory.

XAUUSD Daily

If XAU/USD drops through 1218/4 (i.e. prices get back below the 4-hourly cloud), then the market will retest the aforementioned support in the 1208/5 zone. A break down below 1205 implies the bears will be aiming for 1197/4 next. In case the bears capture this strategic camp, look for further downside with 1188 and 1180 as targets. On the other hand, beware that the short-term charts are slightly bullish. If prices successfully anchor somewhere above the 4-hourly cloud and pass through 1232, then the next stop will be 1242/39. Closing beyond 1242 on a daily basis would make me think that the market could head to the daily cloud. On its way up, expect to see resistance in the 1250.30-1248 region.

XAUUSD H4

Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.

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