Gold Price Forecast: XAU/USD falters near $1875-76 resistance zone

Gold struggled to capitalize on the weekly bullish gap opening on Monday and remained capped near the $1875-76 resistance zone. The retail-inspired pressure on hedge funds shifted to silver and the spillover effect provided a modest lift to the commodity. That said, a combination of factors kept a lid on any further gains. A solid rebound in the equity markets held bulls from placing any aggressive bets around the safe-haven precious metal. Apart from this, a broad-based US dollar strength further weighed on the dollar-denominated commodity.

The greenback was back in demand amid doubts over the timing and size of the US fiscal stimulus measures. In fact, a group of Republican senators urged the US President Joe Biden to cut the price tag for his proposed economic stimulus package and discussed a $618 billion alternative plan. However, Democrat lawmakers filed the $1.9 trillion budget measure to bypass Republicans to get the measure passed in Congress. This, in turn, pushed the US Treasury bond yields higher on Tuesday and exerted some downward pressure on the non-yielding yellow metal.

The XAU/USD was trading below the $1860 level during the latter part of the Asian session, though concerns about the delay in COVID-19 vaccine supplies helped limit the downside. Moving ahead, the broader market risk sentiment will play a key role in influencing the intraday movement for the commodity. This, along with the US bond yields and the USD price dynamics, will also be looked upon for some meaningful trading opportunities.

Technical levels to watch

From a technical perspective, the $1875-76 horizontal resistance, along with a near three-week-old ascending trend-line, constitutes the formation of an ascending triangle on short-term charts. Ascending triangles have a bullish bias and a sustained move beyond would mark a reversal for the XAU/USD. That said, technical indicators on the daily chart are yet to confirm a bullish bias and warrant some caution. This makes it prudent to wait for some follow-through beyond the triangle resistance before positioning for any further appreciating move.

A sustained move beyond should pave the way for an extension of the recent bounce from seven-week lows and push the metal to the $1900 round-figure mark. The momentum could further get extended towards the $1922-24 supply zone en-route the next major hurdle near the $1960 region.

On the flip side, the ascending trend-line, currently around the $1845-44 region, might continue to protect the immediate downside. A convincing break below will negate the constructive outlook, turning the commodity vulnerable to weaken further below the $1830 intermediate support and slide back to challenge the $1800 mark.