Gold Price Forecast: XAU/USD extends downward correction to 20-day SMA at $1,730

  • XAU/USD continues to edge lower after closing in the red on Friday.
  • Gold failed to climb above the 50-day SMA at $1,760.
  • A daily close below $1,730 could trigger another leg lower.

The XAU/USD pair staged a technical correction and closed in the negative territory on Friday. Amid a lack of significant fundamental drivers, the pair extended its slide at the start of the week and was last seen losing 0.6% on a daily basis at $1,733.

A modest rebound witnessed in US Treasury bond yields on Monday seems to be weighing on gold. Currently, the benchmark 10-year US T-bond yield is rising 0.45% on the day at 1.673%. In the latest auction, the US sold $38 billion worth of 10-year notes at a high yield of 1.68%.

Earlier in the day, the Federal Reserve Bank of New York's latest Survey of Consumer Expectations showed that median inflation expectations at the one-year horizon rose to its highest level in nearly seven years at 3.2%. On Tuesday, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data. Investors expect the annual CPI to rise to 2.5% in March from 1.7% and a stronger-than-expected reading could provide a boost to yields and force gold to remain on the back foot.

Gold technical outlook

On the daily chart, the Relative Strength Index (RSI) indicator retreated to 50, suggesting that the bullish momentum is weakening. Additionally, gold tested the 50-day SMA, currently located around $1,760, twice in the last two trading days and failed to break above it, confirming the reluctance of buyers.

On the downside, the 20-day SMA is acting as the first dynamic support at $1,730 ahead of $1,720 (lower limit of the latest horizontal channel). A daily close below $1,720 could attract more sellers and trigger another leg down toward $1,700 (psychological level).

On the flip side, $1,745 (static level) aligns as interim resistance ahead of $1,760 (50-day SMA) and $1,775 (static level).


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