Gold Price Outlook Turns Bearish After Warsh Triggers Sharp Weekly Drop

Friday’s trading range of the metal was $4,445 to $4,630. This created a big bearish candle. Yields on Treasuries rose, and the dollar gained from hawkish remarks from Fed Chair Kevin Warsh. The increased yields put more pressure on the non-yielding metal.

The weekly close put the price back under a number of technical reference points and weakened the build-up from the August lows. Sellers have taken control under significant resistance from CyclesFan, SIRRILLAH, and Alok Jain, in a chart setup.

Analyst Questions the $4,890 Target

CyclesFan’s daily chart compares the price of gold against its 20-day and 200-day simple moving averages. It also corresponds to horizontal resistance that was previously the analyst’s rally target at $4,890.

That dropped below the 200-day average on Friday, casting doubt on that target, the analyst said.

Gold failed to further extend above the $4,650-$4,700 area and in turn, triggered the bearish reversal. Source: CyclesFan Via X

These are the 20 days average that CyclesFan is now observing. If it has made a follow-through drop and breaks below that line, it could represent a midterm high. If that bearish reading is challenged by a quick recovery above both averages, then it could weaken that bearish outlook.

Analyst Maps Liquidity Near $4,200

The 4-hour chart of SIRRILLAH shows a bearish trend. It has been seen to drop from a wide distribution window in the vicinity of $4,680 to Friday’s low at $4,445.

The chart indicates that there may be an upcoming recovery to the $4,520-$4,570 range. This is an order block with resistance on the lower time frame in that area. Source: Sirrilah Via X

Once the SIRRILLAH is seen, the traders should look for sellers to sell at lower levels than the recent swing lows.

The last downside goal is around $4200-$4220. This is sell-side liquidity below the larger time frame of 4 hours. These numbers will be more meaningful once the price reaches $4445 and $4400.

Analyst Watches the $4,700 Breakout

Alok Jain’s chart has a falling trend line from the peak of gold in January. The line has choked off a number of rallies and is still moving through the August price structure.

Jain had said that Warsh’s message had hurt the near-term gold sentiment. He said that he saw a $4,700 level as the place to begin the bull trend.

The analyst’s chart indicates that a strong breakout may be in the process of ending the downward trend pattern. Source: Alok Jain via X

Until that break occurs, rallies may face selling near $4,560, $4,600, and $4,700. Jain hopes the break-out will come later, maybe around October, but it’s his best guess.

Gold Price Levels for Next Week

The first support zone is within a $4,445 to $4,450 range. This is the immediate test this Friday when it comes to resuming trading. A daily close below it could expose $4,400, followed by $4,320-$4,350.

If SIRRILLAH continues to sell below $4,200, it will start to become close to its $4,200 liquidity target. The price would have to hold at $4,445 and recover to $4,500 to put a lid on the drop.

The first resistance is at the price of $4,500-$4,520. Above that range, gold could test $4,560-$4,600. A close above $4,600 would do wonders for the short-term structure and bring back $4,675-$4,700.

The bullish signal is more powerful and will need a prolonged break above $4,700. A pullback to that level would test Jain’s downtrend and bring CyclesFan’s $4,890 target back into play.

This week will also feature U.S. ISM, JOLTS, ADP payrolls, and nonfarm payrolls.

Good production data may bolster yields and continue gold’s upward trend. If weaker data is released, rates will likely be lowered, and a technical recovery will be in play.

Next week is likely to start with a rally back to $4,550 and then correct to the downside below $4,560-$4,600. The $4,445 close is now the primary hurdle.