Gold Price Forecast: XAU/USD rejected at $3,400, is testing support at $3,380

Gold is retreating from two-week highs at $3,400 amid a firmer US Dollar.

Speculation of Waller as the next Fed Chair has provided some support to the US Dollar,

Below $3,380, Gold is lilkely to extend its correction to $3.350.


Gold  (XAU/USD) bulls have failed to breach the psychological resistance area around the $3,400 level on Friday and are showing an impulsive reversal, weighed by the broader US Dollar strength, that has pushed the precious metal towards the support area above $3,380.

A stronger US Dollar is weighing on precious metals on Friday. News reports suggesting that Governour Waller emerges as a top candidate to replace Powell at the Fed's head have soothed investors, wary about the credibility of the central bank, and have provided some support for the US Dollar.

The rebound on the US Dollar, however, is likely to be limited, as, after all, Trump's nominees are expected to pursue his lower rates agenda, especially if US data continues showing evidence of a softening economic momentum. The higher-than-expected jobless claims figures and the moderate unit labour costs seen on Thursday keep hopes of a September rate cut alive, which is likely to add weight to the US Dollar recovery

Technical analysis: XAU/USD is at the bottom of an ascending wedge, at $3,380

The 4-hour chart shows the pair testing the bottom of an ending wedge, a figure often anticipating trend shifts. The bearish divergence on the Relative Strength Index (RSI) supports that idea.

A confirmation below $3,380, where the trendline support crosses the intra-day low, would increase pressure towards the August 6 low at $3.360. The wedge´s measured target is the August 5 low, at $3,350.

On the upside, the pair has been rejected in the vicinity of the 78.6% Fibonacci retracement of the late July sell-off, right above $3,400. Above here, the following upside targets are the 22 July high, at $3,440, and June's peak, at $3,450.