Gold Price Forecast: XAU/USD double-top pattern hinders an impeccable rally

• Gold exploded to an eight-year high this week but a double-top pattern threatens a reversal.
• XAU/USD is in the hands of the bulls as seen with the RSI and the MACD’s upward movements.

Gold prices have been on an incredible upward roll since August 2018. The precious metal continues to break barriers with analysts predicting gains above 2,000 by the end of 2020. This week, XAU/USD rallied to an eight-year high before retreating slightly to 1,799.20 (Friday’s closing).

The rally to the eight-year rally is happening following a massive crash in March to 1,450 due to the COVID-19 pandemic. Unfortunately with the formation of a double-top pattern, gold is staring at a possible slump.

Support is, however, anticipated at 1,750 and 1,700. If push comes to shove and declines continue, we are likely to see gold spiralling to the 50-week SMA ($1,582.87). The major support holds the ground at 1,450 and while the 200-day SMA is in line to offer support at 1,350.

Looking at the prevailing technical picture, gold is comfortably in the hands of the bulls. If the RSI and the MACD remain in the same upward trend, there is a chance that the rally could continue towards 1,850. Consolidation is also welcomed as it would allow the bulls to stage the next attack on the short term hurdle at 1,800.

XAU/USD weekly chart