The decline in Gold is now on the cusp of Credit Suisse’s target of price and retracement support at $1,900/1,890. The bank analyzes XAU/USD technical outlook.
Weekly close below $1,856 to reinforce the longer-term sideways range
Gold has declined to our core target of $1,900/1,890 and with the rising 200-DMA seen not far below at $1,856 we look for a floor in this $1,900/1,856 zone.
We anticipate $1,856 to hold on a closing basis, paving the way for a potential rally to $1,985 initially, followed by a retest of major resistance at the $2,063/2,075 record highs. Our bias remains towards an eventual breakthrough to new record highs later in the year, which would then open the door to a move above $2,300.
A weekly close below $1,856 would reinforce the longer-term sideways range, potentially leading to a decline to the next support level at $1,810/05.
Gold Price Forecast: XAU/USD to find a major floor at the 200-DMA of $1,856 – Credit Suisse
In the wake of the economic uncertainty caused by the ongoing global pandemic, gold has emerged as a safe haven for investors. Its value has surged to record highs as investors seek refuge from the volatility of the stock market. With this in mind, Credit Suisse, a renowned financial institution, has released a forecast suggesting that gold will find a major floor at the 200-day moving average (DMA) of $1,856.
Gold prices have been on a steady upward trajectory, driven by geopolitical tensions, the weakening US dollar, and fears of a global recession. However, with the recent announcement of effective COVID-19 vaccines, optimism has resurfaced in the markets, leading to a temporary decline in gold prices. Credit Suisse believes that this correction will be short-lived and that gold will bounce back, finding support at the 200-DMA.
The 200-day moving average is a widely followed technical indicator used by many traders and investors to identify key support or resistance levels. It is calculated by averaging the closing prices of an asset over the past 200 days. This moving average acts as a significant psychological level, and if breached, it could trigger a definitive trend reversal.
Credit Suisse’s gold price forecast is based on a comprehensive analysis of various factors, including market sentiment, macroeconomic indicators, and technical analysis. They argue that the 200-DMA has historically served as a strong support level for gold during prolonged bull markets. This view is supported by the fact that gold prices have not closed below the 200-DMA since 2019.
Moreover, Credit Suisse highlights the current macroeconomic environment as a key driver for their prediction. Despite the positive news surrounding COVID-19 vaccines, the global economic recovery is expected to be slow and uneven. The near-zero interest rate policies adopted by major central banks, coupled with massive fiscal stimulus measures, are likely to exert downward pressure on the US dollar and elevate inflation expectations. These factors are conducive to higher gold prices in the medium to long term.
It is essential to note that Credit Suisse’s forecast is not infallible. The markets are inherently unpredictable and can be influenced by unforeseen events, such as geopolitical tensions or sudden shifts in investor sentiment. Additionally, technical analysis should be considered alongside fundamental analysis and other market indicators for a comprehensive understanding of gold price dynamics.
In conclusion, Credit Suisse’s gold price forecast suggests that XAU/USD will find strong support at the 200-DMA of $1,856. The firm’s analysis takes into account multiple factors contributing to gold’s recent rally and the potential for future price movements. However, investors should always apply their own judgment and consider multiple perspectives before making any investment decisions.