Gold Price Forecast XAU/USD – Bearish Reaction to Strong Inflation Data put $1749.60 on the Radar

Gold futures are sharply lower near the mid-session on Friday with the market testing its lowest level since December 22. The catalyst behind the selling pressure is strong U.S. economic data that dampened gold’s investment appeal as the prospects of more interest rate hikes by the Federal Reserve rose.

At 17:30 GMT, April Comex gold futures are trading $1817.50, down $9.30 or -0.51%. The SPDR Gold Shares ETF (GLD) is at $168.42, down $1.15 or -0.68%.

Gold is being pressured by hotter-than-expected consumer spending and Core PCE Index. Both reports support the notion the Fed will have to continue to raise rates until it can tame inflation. These reports are helping to boost Treasury yields and the U.S. Dollar.

Daily April Comex Gold Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when gold took out the previous session’s low at $1824.80 and the December 28 minor bottom at $1819.30.

The minor trend is also down. A trader through $1856.40 will change the minor trend to up and shift momentum to the upside.

Gold is also trading on the weak side of a long-term 50% level at $1843.40, making it resistance while putting the market in a bearish position.

Daily April Comex Gold Technical Forecast

The direction of the April Comex Gold futures contract into the close on Friday is likely to be determined by trader reaction to $1826.80.

Bearish Scenario

A sustained move under $1826.80 will indicate the presence of sellers. Taking out the intraday low at $1815.50 will indicate the selling pressure is getting stronger. This could trigger a further break into minor bottoms at $1808.40 and $1797.60.

The ultimate objective of this current sell-off is the Nov. 23 main bottom at $1749.60.

Bullish Scenario

A sustained move over $1826.80 will signal the presence of buyers. This will put the market in a position to post a potentially bullish closing price reversal bottom with $1843.40 the first objective.

Side Notes

When gold signaled a top on Feb. 2 with a dramatic closing price reversal top, our first objective of the move was $1862.40. With the market now trading on the weak side of the longer-term 50% level at $1843.40, our next major objective is $1749.60.

The daily chart looks as if the market could accelerate to the downside from $1843.40 to $1749.60, but there are several minor bottoms in the way. Now we expect the market to “stair-step” lower.

The first minor bottom at $1819.40 was broken earlier today. The next potential targets are $1808.40, $1797.60, $1793.60 and $1769.20.

We could still see a direct break into $1749.60, but it’s looking more and more like it will be a slow grind down to that level.