Gold Price Forecast: XAU/USD eyes next resistance at $1,858 amid triangle breakout

Gold price is holding sizable gains on its four-day uptrend on Wednesday, helped by a sharp decline in the US Treasury bond yields across the curve. The US Treasury bond yields come under renewed selling pressure amid Increased expectations that the Minutes of the US Federal Reserve (Fed) December meeting will highlight the widening divergence between the Fed hawks and the doves on how high the terminal rate could go. Falling yields are prompting a reversal in a broad-based US Dollar recovery, helping Gold price gains further upside traction. The benchmark 10-year US yields are down 1.75% to 3.73% at the time of writing.

Ahead of the Fed Minutes, investors will take cues from the US Dollar price action in response to the US ISM Manufacturing PMI data release. Economists are expecting the headlines figure to weaken, but potential improvement in the ISM components could offer a temporary boost to the US Dollar bulls. But the reaction will likely fade out, as the sentiment on Wall Street will probably influence Gold price positioning significantly.

On Tuesday, the Gold price hit the highest level in seven months at $1,850, but the precious metal failed to sustain at higher levels and reversed sharply, as the US Dollar staged an impressive recovery on the first full trading day of 2023. Softer German inflation data weighed heavily on the euro area peripheral yields and the Euro, offering additional legs to the upturn in the US Dollar Index.

Gold price technical analysis: Daily chart

Technically, the Gold price remains on track to extend its bullish momentum after it confirmed an upside from the ascending triangle on Tuesday.

Gold bulls closed Tuesday above the horizontal trendline (triangle) resistance at $1,825, initiating a fresh uptrend in the bright metal. Buyers must find acceptance above the psychological $1,850 level, which is also the seven-month top, to take on the next critical hurdle at $1,858 – June 16 2022, high.

The 14-day Relative Strength Index (RSI) sits just beneath the overbought territory at around 66.50, suggesting more room for the upside.

On the flip side, any retracement will find strong bids at the intraday low at $1,836, below which the abovementioned triangle resistance-turned-support at $1,825 will be challenged.  

A deeper correction will call for a test of Friday’s low at $1,814.