Gold Price Forecast: XAU/USD eyes $1,800 and Treasury yields post-hawkish BoJ pivot


  • Gold price finds fresh buyers as the US Dollar follows the USD/JPY downhill.
  • Hawkish BoJ policy pivot smashed global bond markets, spiked up US Treasury bond yields.
  • Gold price defends 200-Daily Moving Average once again, recapturing $1,800 is critical.

Having defended the critical 200-Daily Moving Average (DMA) support at $1,785 on Monday, Gold price once again found fresh buyers near that level and staged a solid bunce in early Tuesday. The sudden upswing in the Gold price could be attributed to a significant market reaction to a surprise hawkish Bank of Japan (BoJ) policy shift. The BoJ left the rates unchanged but announced plans to increase its purchases of 10-year bonds and also widened the band for yields to +/-50 basis points, from +/-25 basis points. The revision to its yield curve control (YCC) framework triggered a massive 3% rally in the Japanese Yen against the US Dollar, smashing the US Dollar Index sharply lower and propelling Gold price toward the $1,800 mark.

Although Gold bulls struggle to extend the renewed upside, as the BoJ’s surprise move sent shock waves across the bond markets, spiking up yields globally. In response, the US Treasury bond yields are rallying 3.50% to 4% across the curve, with the benchmark 10-year US rates above 3.70%, at the moment. Surging US Treasury yields are acting as a big hurdle to Gold’s upswing. Looking ahead, investors will assess the BoJ’s move and Governor Haruhiko Kuroda’s comments for further impact on the global bond markets and US yields.

On Monday, Gold price reversed early gains and ended in the red, extending its losing streak into the third straight day. The sharp recovery in the US Dollar amid persistent weakness in Wall Street indices and hawkish Fed policy outlook-led recession fears. Markets also remained unnerved by the news that COVID-19 is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai. The country reported five new COVID deaths on Monday. China is the world’s biggest Gold consumer.

Gold price technical analysis: Daily chart

As observed on the daily chart, the crucial 200-DMA at $1,785 managed to defend Gold buyers for the second straight day this Tuesday.

Bulls now yearn for a sustained break above the $1,800 barrier, with the next resistance seen at at December 15 highs of $1,809.

Fresh buying opportunities will emerge above the latter, calling for a test of the December 14 high at $1,814.

The 14-day Relative Strength Index (RSI) inches higher above the midline, justfiyng the latest uptick in the yellow metal.

On the flip side, a breach of the 200DMA on a daily closing basis will reopen floors toward the bullish 21DMA at $1,777.

Selling pressure will likely intensifiy on a sustained move below the critical short-term line of defense of 21DMA, fuelling a fresh downswing toward the $1,750 psychological level.

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