Gold Price Forecast: XAU/USD eyes daily close for Falling Wedge confirmation

  • Gold price is looking to build on the previous rebound above $1,800.  
  • Risk tone remains firmer despite doubts over ‘soft-landing’ amid hawkish Federal Reserve bets.
  • United States Durable Goods Orders disappoint; Consumer Confidence next of note.
  • Gold price awaits Falling Wedge confirmation on a daily closing above $1,814.

Gold price is extending the recovery momentum from two-month lows of $1,807 into early Tuesday. The United States Dollar struggles to find its footing amid sluggish US Treasury bond yields and an upbeat market mood. All eyes turn to the US Conference Board (CB) Consumer Confidence data.

United States data to lead the Federal Reserve sentiment

Gold price staged a solid rebound on Monday after hitting the lowest level in two months in the early part of the day, as the US Dollar bulls remained in control amidst Friday’s hot United States Core Personal Consumption Expenditures (PCE) Price Index and escalating geopolitical tensions between the West and China over Russia.

The tide, however, turned against Gold sellers in American trading after the top-tier US Durable Goods Order disappointed and rekindled doubts whether the United economy could see a ‘soft-landing’, as the US Federal Reserve is set to maintain rates higher for longer. The headline US Durable Goods Orders sank 4.5% in January vs. -4.0% expected and 5.1% previous. The US Dollar Index pulled back sharply from multi-week highs of 105.36 on the data release to fall as low as 104.55, lifting the Gold price to the $1,820 round figure. The retreat in the US Treasury bond yields also boded well for the non-yielding Gold. The benchmark 10-year US Treasury bond yield faces stiff resistance just shy of the 4.0% key level.

However, the further upside in the Gold price remained capped, as the US central bank is still anticipated to deliver three more 25 basis points (bps) rate hikes this year. Robust US Pending Home Sales data also helped limit the Gold price rebound. Next of relevance for the Gold price remains the US CB Consumer Confidence data, which will be released alongside other minority reports. Federal Reserve officials' speeches will also be closely scrutinized for fresh trading impetus.

Upbeat market mood checks US Dollar bounce

Ahead of the US economic data releases, the market mood remains upbeat as investors continue to weigh the potential for a soft landing, especially after Monday’s weak US Durable Goods data and comments from US Treasury Secretary Janet Yellen. In an exclusive interview with CNN News on Monday, Yellen said that she believes US inflation remains too high but that a soft landing is on the radar.

A firmer risk tone reflects the 0.20% gain in the US S&P 500 Futures while the Asian equities track the Wall Street higher. The risk-on market profile limits the recovery attempts in the United States Dollar, underpinning the Gold price for another potential upside this Tuesday.

Gold price technical analysis: Daily chart

Gold price is teasing a falling wedge formation on the daily chart, having opened Tuesday above the falling trendline resistance at $1,814.

Daily closing above the latter is needed to validate the bullish reversal pattern, with a quick test of Friday’s high at $1,828 on Gold buyers’ radars.

Further up, the $1,730 round number will be retested, above which the previous week’s high at $1,846 will lure bulls on the road to recovery.

However, with the bearish 14-day, Relative Strength Index (RSI) and the 21 and 50-Daily Moving Averages (DMA) bearish crossover still in play, any rebound in the Gold price is likely to be sold off at higher levels.

On the downside, crucial support is seen at Monday’s low of $1,807, below which the $1,800 mark will be tested.

Further declines will challenge the bullish 100 DMA at $1,795. The last line of defense for Gold buyers is seen at the falling trendline (wedge) support, now at $1,789.

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