Gold Price Forecast: Boosted by plummeting yields

Valeria Bednarik FXStreet

XAU/USD Current price: $1,797.20

US Treasury yield plunged after a failed 30-year note auction, weighing on the dollar.
The European Central Bank left its monetary policy unchanged, refused to discuss tapering.
XAU/USD neutral-to-bearish long term stance persists as long as below 1,825.10.

Gold prices seesawed between gains and losses but were unable to find a way. XAU/USD trades marginally higher on a daily basis, around $1,797 a troy ounce, after the most relevant event of the week left market participants with a bitter taste in the mouth and failed to spur directional price action. The European Central Bank left rates and the bond-buying programs unchanged, although the pandemic emergency program will continue at a “moderately lower pace.” Lagarde said that it’s not tapering but “reshuffling.”

Meanwhile, the greenback shed ground throughout the first half of the day, weighed by softer US government bond yields and the soft tone of global equities. Spot gold jumped to an intraday high of 1,800.97 but was unable to stabilize above the psychological threshold. Government bond yields resumed their declines mid-US afternoon, pushing the metal towards the upper end of its daily range. The yield on the 10-year US Treasury yield fell to 1.287%, breaking below the critical 1.30% threshold.

Gold price short-term technical outlook

The daily chart for XAU/USD shows that it is trading around the 50% retracement of its March/June rally at 1,796.70. The technical stance is neutral-to-bearish, as it is developing below directionless moving averages, while technical indicators remain path for a second consecutive day.

In the near term, and according to the 4-hour chart, the bullish potential is also limited. The price is hovering around a flat 200 SMA while the 20 and 100 SMAs remain above the current level, with the shorter one maintaining its bearish slope. Technical indicators have recovered from intraday lows, but remain within negative levels. Bulls will have better chances if gold manages to break above 1,810.40, the immediate resistance level.

Support levels: 1,787.55 1,769.10 1,760.00

Resistance levels: 1,801.00 1,810.40 1,825.10

View Live Chart for the XAU/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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