Gold Price Forecast: Will XAU/USD close the week above critical 21-DMA at $1,935?

Gold price reverses previous gains amid US dollar firms up with yields.
Hawkish Fed outlook and the Russia-Ukraine crisis fuel risk-aversion.
Gold price defended $1,915 but recapturing the $1,935 barrier is critical.

Dhwani Mehta FXStreet

After closing modestly flat on Wednesday, gold price picked up the upside momentum and advanced towards $1,940, having defended the $1,915 demand area yet again. The gains in gold price came despite a multi-month high upsurge in the US dollar, as well as, in the Treasury yields. The benchmark 10-year rates rallied to the highest since March 2019 at 2.673% while the US dollar index (DXY) climbed to 99.89, the strongest level since May 2020.

Meanwhile, the US and Europe widened their specter of sanctions or punishments against the Russian atrocities on the Ukrainian civilians. Further, investors continued to assess the implications of higher borrowing costs, as the Fed is likely to go full throttle on its policy normalization as early as its next meeting in May. The looming risks dented the sentiment on global markets, as economic growth concerns re-emerged, reviving gold’s appeal as a safe-haven asset.

Gold price is seeing some fresh selling pressure on the final trading day of the week, as the dollar continues to reach the skies in tandem with the yields. The cautious market mood, however, keeps the downside cushioned in gold price. Fundamentally, the Fed rate hike expectations and the developments surrounding the Ukraine crisis will continue to remain the main driving forces behind gold’s price action. Also, a data-scarce US economic calendar will likely keep all eyes glued to the market’s perception of risk sentiment.

Gold: Daily chart

Gold’s daily chart shows that the price is challenging the critical short-term 21-Daily Moving Average (DMA) at $1,935.

The 14-day Relative Strength Index (RSI) is remaining flatlined at the 50.00 level, suggesting a lack of clear direction for gold price.

Should the bright metal yield a daily/ weekly closing above the 21-DMA barrier, then a fresh uptrend towards the March 24 peak at $1,966 cannot be ruled out.

Further up, bulls will aim for the strong resistance around $1,990-$2,000.

On the downside, the recent range lows at $1,915 will be the immediate cushion, below which the ascending 50-DMA at $1,909 could be put to test.

The next stop for bears is seen at the $1,900 threshold, a breach of the latter will expose the March 29 lows of $1,890.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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