Gold Price Forecast: XAU/USD rebounds but not out of the woods yet
- Gold price sees a tepid bounce, as the US Dollar rally takes a breather ahead of PMIs.
- US Treasury bond yields sit at multi-year highs on hawkish Fed pause, could cap Gold price rebound.
- Gold price failed to defend the key support on Thursday, what’s next?
Gold price is recovering ground from the weekly low of $1,914 ahead of a busy Friday, packed with preliminary global PMI data releases. The United States Dollar (USD) is taking a breather even though the US Treasury bond yields are setting fresh multi-year highs.
Gold price awaits global PMIs
The US Dollar is correcting from six-month highs against its major peers, as the Bank of Japan’s (BoJ) steady policy provided a sense of calm, lifting the overall market mood. Investors’s sentiment was dented by the US Federal Reserve’s (Fed) hawkish stance, which suggested a ‘higher for longer’ interest rate view. The BoJ maintained its ultra-easy monetary policy, signaling it was in no rush to wind up its massive monetary stimulus.
Gold price is capitalizing on a broad US Dollar retreat, rebounding to a critical resistance. The further recovery, however, appears elusive amid a renewed uptick in the US Treasury bond yields. The benchmark 10-year US Treasury bond yield is flirting with fresh 16-year highs of 4.511%.
Later in the day, Gold traders will look forward to the US, UK and Euro area business PMI data for fresh hints on the state of the global economy, as major economies remain on the brink of recession. If risk-aversion seeps in on discouraging PMI reports, the US Dollar is likely to find fresh safe-haven demand, checking the Gold price recovery.
The end-of-the-week flows will likely remain in play, influencing the US Dollar valuations, in turn, affecting the Gold price action.
Gold price technical analysis: Daily chart
Gold price is challenging the critical support-turned-resistance at $1,925, which is the meeting point of the 21- and 200-Daily Moving Averages (DMA).
A firm break above the latter is needed to unleash additional recovery toward the 50 DMA at $1,930. Further upside will hinge on acceptance above the 50 DMA, with eyes on the $1,950 barrier next.
The 14-day Relative Strength Index (RSI) indicator is sitting just beneath the 50 level, raising doubts about the Gold price rebound.
On the downside, the weekly low of $1,914 could be retested, reopening floors toward the $1,910 round figure. The next critical support awaits at the $1,900 threshold.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
