Gold Price Forecast: XAU/USD eyes monthly lows near $1,900, as focus shifts to Fed
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UPGRADE- Gold sellers to extend control as US Treasury yields hit the highest since June 2019.
- Ukraine crisis, hawkish Fed expectations to underpin the DXY, down gold price.
- Gold price breaches critical daily support levels, focus on Tuesday’s close.
Gold price is heavy so far this Tuesday’s trading, meandering near weekly lows below $1,940 amid a mixed market mood. The bright metal is extending its three-day losing streak, looking to continue the correction from 19-month highs of $2,071 reached a week ago.
Anxiety over the Ukraine crisis combined with the expected Fed rate hike is keeping investors on the edge. On the other side, stronger than expected Chinese Industrial Production and Retail Sales data have eased worries over a likely slowdown in the world’s second-largest economy, which is currently battling another wave of COVID-19. Although Chinese stocks remain deep in the red on concerns over the covid lockdowns.
Also, calming the sentiment is the sharp pullback in crude oil prices, which has lifted off the concerns over raging inflation, at least for the time being. Both crude benchmarks are in a downward spiral, now losing roughly 4% on the day.
Meanwhile, the ongoing uptrend in the US Treasury yields keeps the bearish pressures intact on the non-interest-bearing gold. Hawkish Fed’s expectations underpin the global borrowing costs while lending support to the US dollar.
On the geopolitical front, the Russia-Ukraine war is likely to come to end by early May, according to the Ukrainian Presidential adviser Oleksiy Arestovich. The uncertainty amid prolonged diplomatic talks will leave investors scurrying for safety in the greenback while exerting downward pressure on gold price.
Gold price started off the week on a wrong footing on Monday, unable to find any comfort from the risk-off market mood, as the relentless rise in the Treasury yields outweighed. Meanwhile, gold bulls failed to capitalize on the US-Sino high-level talks, as US officials noted that Russia had asked the Chinese military for aid. The talks were, however, ‘substantial’ and ‘constructive’.
Looking ahead, the Fed sentiment and Ukraine updates will continue to influence the market mood, eventually impacting the dollar and gold valuations.
Gold Price Chart - Technical outlook
Gold: Daily chart
The three-day downtrend in gold price is attacking the upward-sloping 21-Daily Moving Average (DMA) at $1,934.
The selling pressure intensifies after the bright metal opened Tuesday below the one-month-old rising trendline support, now at $1,955, having tested the latter a day before.
The Relative Strength Index (RSI) is pointing south, looking to pierce the midline for the downside, backing the ongoing downbeat momentum.
Therefore, a daily closing below the abovementioned critical daily trendline support will open doors for a drop towards the March lows of $1,902 should the 21-DMA give way on a sustained basis.
On the flip side, recapturing the trendline support now resistance at $1,955 is critical to initiating a meaningful recovery towards the $2,000 mark.
The next relevant stop for gold bulls is seen at the March 10 highs of $2,009. Further up, a fresh upswing towards the psychological level of $2,050 cannot be ruled out.
- Gold sellers to extend control as US Treasury yields hit the highest since June 2019.
- Ukraine crisis, hawkish Fed expectations to underpin the DXY, down gold price.
- Gold price breaches critical daily support levels, focus on Tuesday’s close.
Gold price is heavy so far this Tuesday’s trading, meandering near weekly lows below $1,940 amid a mixed market mood. The bright metal is extending its three-day losing streak, looking to continue the correction from 19-month highs of $2,071 reached a week ago.
Anxiety over the Ukraine crisis combined with the expected Fed rate hike is keeping investors on the edge. On the other side, stronger than expected Chinese Industrial Production and Retail Sales data have eased worries over a likely slowdown in the world’s second-largest economy, which is currently battling another wave of COVID-19. Although Chinese stocks remain deep in the red on concerns over the covid lockdowns.
Also, calming the sentiment is the sharp pullback in crude oil prices, which has lifted off the concerns over raging inflation, at least for the time being. Both crude benchmarks are in a downward spiral, now losing roughly 4% on the day.
Meanwhile, the ongoing uptrend in the US Treasury yields keeps the bearish pressures intact on the non-interest-bearing gold. Hawkish Fed’s expectations underpin the global borrowing costs while lending support to the US dollar.
On the geopolitical front, the Russia-Ukraine war is likely to come to end by early May, according to the Ukrainian Presidential adviser Oleksiy Arestovich. The uncertainty amid prolonged diplomatic talks will leave investors scurrying for safety in the greenback while exerting downward pressure on gold price.
Gold price started off the week on a wrong footing on Monday, unable to find any comfort from the risk-off market mood, as the relentless rise in the Treasury yields outweighed. Meanwhile, gold bulls failed to capitalize on the US-Sino high-level talks, as US officials noted that Russia had asked the Chinese military for aid. The talks were, however, ‘substantial’ and ‘constructive’.
Looking ahead, the Fed sentiment and Ukraine updates will continue to influence the market mood, eventually impacting the dollar and gold valuations.
Gold Price Chart - Technical outlook
Gold: Daily chart
The three-day downtrend in gold price is attacking the upward-sloping 21-Daily Moving Average (DMA) at $1,934.
The selling pressure intensifies after the bright metal opened Tuesday below the one-month-old rising trendline support, now at $1,955, having tested the latter a day before.
The Relative Strength Index (RSI) is pointing south, looking to pierce the midline for the downside, backing the ongoing downbeat momentum.
Therefore, a daily closing below the abovementioned critical daily trendline support will open doors for a drop towards the March lows of $1,902 should the 21-DMA give way on a sustained basis.
On the flip side, recapturing the trendline support now resistance at $1,955 is critical to initiating a meaningful recovery towards the $2,000 mark.
The next relevant stop for gold bulls is seen at the March 10 highs of $2,009. Further up, a fresh upswing towards the psychological level of $2,050 cannot be ruled out.
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