Gold Price Forecast: $1,800 remains as tough resistance to crack for XAU/USD

  • XAU/USD lost its traction following Monday's sharp upsurge.
  • 10-year US T-bond yield turned south in early American session.
  • Near-term outlook remains bullish but a daily close above $1,800 is required for additional gains.

The XAU/USD pair started the week on a firm footing and gains more than 1% on Monday. However, gold struggled to break above $1,800 and staged a technical correction toward $1,780 on Tuesday before beginning to erase its losses. As of writing, gold was down 0.22% on a daily basis at $1,790.

The broad-based selling pressure and falling US Treasury bond yields on Monday helped XAU/USD gather bullish momentum. The benchmark 10-year US T-bond yield lost nearly 2% and helped gold find demand. Furthermore, the risk-positive market environment made it difficult for the greenback to attract investors.

The sharp decline witnessed in the S&P 500 Futures during the European trading hours on Tuesday provided a boost to the USD and weighed on XAU/USD. Additionally, rising T-bond yields forced gold price to continue to push lower.

However, the 10-year US T-bond yield reversed its direction during the early trading hours of the session and allowed gold to edge higher. Nevertheless, with Wall Street's main indexes opening the day deep in the red, the USD preserved its strength and kept XAU/USD's rebound limited.

Earlier in the session, the data published by the US Census Bureau showed that the goods and services deficit of the US widened by $3.9 billion to $74.4 billion in March. This reading was largely in line with the market expectation and failed to trigger a significant market reaction. 

Gold technical outlook

On the daily chart, the Relative Strength Index (RSI) indicator stays near 60, suggesting that buyers remain in control of gold prices. However, only a daily close above $1,800 (psychological level, 100-day SMA) is likely to trigger another leg up as sellers managed to defend this level numerous times. The next target on the upside aligns at $1,820 (Fibonacci 50% retracement of the January-March downtrend).

On the other hand, additional losses are likely if gold closes below $1,785 (Fibonacci 38.2% retracement). $1,768 (20-day SMA) could be seen as the next support before $1,740 (50-day SMA/Fibonacci 23.6% retracement).

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