Gold Technical Analysis: Gold Price Facing Decisive Peaks

The bulls’ control over the performance of the XAU/USD gold price still exists. The weakness of the US dollar and fears of global recession remain important factors for further gains in the price of the yellow metal. It tested the resistance level of $1942 an ounce, its highest since April of the year 2022, and settled around the level of $1930 an ounce at the time of writing.

US stock prices fluctuated after their best two-day rally since November, with traders scrutinizing a raft of earnings for clues to the outlook for US companies amid growing recession fears. Just hours into tech company earnings season, a few other enthusiasts are reporting their numbers.

By performance, the Dow Jones index - a proxy for economic activity - fell on the back of disappointing results from Union Pacific Corp. 3M, coupled with the determination of major companies to cut jobs. Besides, there is a mixture of mixed earnings and economic figures that make investors reluctant to take more risks, especially after the rise in stocks that pushed the S&P 500 index to rise by 12 percent from its lowest level in mid-October. Business activity in the US contracted for the seventh month, albeit at a more moderate pace, while a measure of input prices confirmed continued inflationary pressures.

Latest major global news.

The US Department of Justice and eight states have sued Alphabet Inc.'s Google, and called for the search giant's advertising technology company to be dismantled over its alleged illegal monopoly in the digital advertising market.

General Electric continues to grapple with unresolved issues in its renewable energy business, even as the manufacturer says strong demand for air travel will help boost overall earnings this year. Meanwhile, Johnson & Johnson was guided by stronger earnings for 2023 than analysts had expected after a year in which the drug division struggled due to slumping demand for its unpopular COVID-19 shot.

According to experts, the bubble bursting in US stocks is not over yet and investors should not be too excited about a strong start to the year for the market, and the scope of the problems is greater than it usually is - perhaps as large as I have ever seen it.

Technical Outlook

The recent rally in the Nasdaq 100 has left the gauge just below the 23.6 percent Fibonacci retracement of its 2021 record high and September low. This level has acted as resistance three different times late last year, with rallies above it fading each time. Even if it does break through, it would then face a test of its 200-day moving average, a line above which it hasn't traded in almost a year.

With the Fed's February 1 rate decision about a week away, options market traders are contemplating a scenario where a rate hike is expected to end up at the end of the tightening cycle. The swap market is pricing in about 48 basis points to raise US interest rates during the next two policy meetings. That means there is a small chance — about 8 percent — that if the Fed raises its benchmark rate by a quarter of a point next week, it could be the central bank's final step in a tightening cycle that marks the most aggressive measure against inflation in several decades.

XAU/USD gold price forecast today:

  • There is no change in my technical point of view for the performance of the XAU/USD gold price.
  • The general trend is still upward.
  • Stability is above the psychological resistance at $1900 an ounce, confirming the bulls’ control and testing the resistance levels at 1936, 1945, and $1960, respectively.
  • The upcoming events are sufficient to push the technical indicators towards strong overbought levels, among which profit-taking sales are expected at any time.

Breaking the support level of $1892 will be important for a first break of the current general bullish trend. The price of gold today will be affected by the level of the US dollar and whether or not investors are willing to take risks.

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Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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