Gold price forecast: near-term bounce, sellers still in charge

XAU/USD Current Price: $4,368 

• A suspected Bank of Japan intervention on the Yen weighed on the US Dollar.
• The Bank of Canada left rates unchanged, but opened the door for “multiple” rate hikes.
• XAU/USD bounced from a fresh one-month low, risk still skewed to the downside.

The XAU/USD pair trades around $4,360, up on Wednesday after bottoming at $4,282 during Asian trading hours. The US Dollar (USD) maintained its positive tone throughout the first half of the day, but changed course early in the American session, helped by two external factors.

On the one hand, a sharp Japanese Yen (JPY) appreciation put pressure on the USD. Market participants suspect that yet another intervention took place as the USD/JPY pair briefly traded above the 160.00 mark, although there is no official confirmation. Still, the pair shed roughly 200 pips in a matter of hours, usually the result of some action from the Bank of Japan (BoJ).

On the other hand, the Bank of Canada (BoC) announced its monetary policy decision, leaving the policy rate unchanged at 2.25%, as expected. However, the Canadian Dollar (CAD) appreciated sharply after Governor Tiff Macklem's speech, in which he not only acknowledged the risks to the inflation outlook as a result of the Middle East conflict, but also said that multiple interest rate hikes should not be ruled out.

JPY and CAD strength weighed on the Greenback, while a bounce in stocks compounded the latter's near-term weakness.

The fundamental background, however, remains the same: Crude Oil prices remain near their recent highs following an escalation in the Middle East war. This, in turn, fuels concerns about mounting inflationary pressures across the globe.

XAU/USD Technical Outlook:

In such a scenario, XAU/USD recent recovery does not erase prevalent downward pressure. The technical picture is bearish after the pair broke below $4,400.

In the four-hour chart, XAU/USD trades beneath the 20-period and 100-period Simple Moving Averages (SMAs) at $4,399.10 and $4,479.23, respectively, while remaining only supported by the 200-period SMA down at $4,305.43. The Relative Strength Index (RSI) indicator resumed its decline after correcting oversold conditions, while the Momentum indicator turned south below its midline, both reflecting sellers' dominance.

On the daily chart, XAU/USD struggles around its 100-day SMA at roughly $4,361, while still capped below the 20-day SMA near $4,448. The broader tone is neutral to slightly topside-capped, with the price sitting below the 200-day SMA around $4,531, and technical indicators stuck around their midlines.

On the topside, initial resistance is seen at the 20-period SMA at $4,399.10, with a stronger barrier at the 100-period SMA near $4,479.23, where a sustained break would be needed to ease the current downside pressure. On the downside, the 200-period SMA at $4,305.43 is the immediate support ahead of the mentioned weekly low. Once below the latter, the $4,200 threshold comes in sight.

(The technical analysis of this story was written with the help of an AI tool. Know more.)