Gold Price Forecast: XAU/USD steadies on the way to $1,900, Fed’s Powell in focus
|- Gold prices remain pressured despite recent inaction as Treasury yields renew multi-month top.
- Stock futures print mild gains but USD bulls stay cautious ahead of Powell’s speech.
- Ukraine-Russia crisis continues to take a toll on sentiment, Western sanctions eyed.
- Gold Price Forecast: XAU/USD braces for another hit, with eyes on Powell and yields
Gold (XAU/USD) prices tread water around $1,920-25 heading into Wednesday’s European open. It should be noted that the metal dropped the most since June 2021 the previous week and stays depressed so far during the current week.
In doing so, the bright metal struggles for clear direction as the US dollar refrain from rising despite multi-month high Treasury yields. Also restricting the bullion’s immediate moves is the market’s anxiety ahead of a speech from Fed Chairman Jerome Powell and mixed concerns over the Ukraine-Russia stand-off.
The US Dollar Index (DXY) remains lackluster around 98.50 even as the US Treasury yields rally to a three-year high. The reason could be linked to the hopes that central bankers to return to normal after they’re done fighting the inflation woes. It’s worth noting that the global bond markets print the record loss if counted from 2021 top, per Bloomberg.
Other than the central bank chatters, the indecision over the Kyiv-Moscow story also limits XAU/USD moves. Recently, Ukraine’s easy stand fails to provide any positive impact as Russian ships play hardball in Mariupol. Also challenging the odds of improving are the Western sanctions. The Wall Street Journal (WSJ) signaled that the Biden administration is up for sanctioning over 300 Russian lawmakers while also showing readiness to seize Moscow’s gold with their Treasury.
Amid these plays, the US 10-year Treasury yields renew the highest levels since May 2019, around 2.41% at the latest while the 2-year counterpart prints 2.19% figure by the press time, after renewing three-year top to 2.198% before a few minutes. Also, the stock futures struggle to track Wall Street’s gains by the press time.
To gain more clarity over gold prices move, market players will keep eyes on today’s speech from Fed’s Powell as his early-week comments triggered the bond rout.
Technical analysis
Although sluggish MACD and steady RSI portray gold traders’ indecision, failures to cross the 100-SMA and a one-month-old horizontal area keep sellers hopeful.
That said, the 200-SMA defends intraday bulls around $1,914, a break of which will direct the quote towards an ascending support line from February 24, near $1,900 by the press time.
It should be noted, however, that the late February’s swing low surrounding $1,878 will act as the last defense for gold buyers.
Alternatively, the 100-SMA level near $1,955 restricts the XAU/USD upside ahead of the aforementioned horizontal resistance zone close to $1,970-75.
In a case where gold prices rally beyond $1,975, a run-up towards the $2,000 psychological magnet can’t be ruled out.
Gold: Four-hour chart
Trend: Further weakness expected
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