Gold Price Forecast: XAU/USD remains stuck below key averages, what’s next?

Gold price is easing toward $1,920, making it for a negative start to a key week ahead. The United States Dollar (USD) and the US Treasury bond yields have entered a phase of consolidation near last week’s high, as investors look to this week’s inflation data from the US and Europe for a fresh directional impetus.

Gold price at the mercy of US Dollar, US Treasury bond yields

In Monday’s trading so far, risk sentiment has turned sour, as investors prefer to stay on the sidelines, assessing major central banks’ ‘higher for longer’ rate view while renewed worries around China’s property markets also dent risk appetite.

“Evergrande said late on Sunday that due to an investigation into Hengda Real Estate Group, a flagship onshore unit, it was unable to meet the qualifications to issue new notes under its debt restructuring proposal,” per Reuters.

Meanwhile, a slew of US Federal Reserve (Fed) policymakers continue to back the case for more interest rate increases, as inflation remains still ‘too high’. Therefore, a sense of caution prevails while the US Treasury bond yields continue to cheer the hawkish Fed outlook.  

Investors also refrain from placing any big bets on the FX majors, as well as, Gold price, positioning ahead of the inflation from the US and Eurozone. China’s business activity data is also eagerly awaited to gauge whether the world’s second-largest economy is regaining traction. The resumption of the rally in Oil prices also fuels jitters across the markets, as investors weigh its negative impact on inflation and global growth.

In light of these factors, a steady US Dollar and firmer US Treasury bond yields are exerting downward pressure on the non-interest-bearing Gold price.

Looking ahead,  a relatively quiet US economic docket will leave the Gold price at the mercy of risk sentiment and the US Dollar price action alongside the US Treasury bond yields. Germany’s IFO survey will be closely eyed for fresh cues on the state of the Eurozone economy. Meanwhile, speeches from Fed policymakers could also entertain Gold traders.

Gold price technical analysis: Daily chart

Gold price remains capped below the critical support-turned-resistance at $1,926, where the 21- and 200-Daily Moving Averages (DMA) coincide.

On Friday, Gold price managed to pierce through the latter to challenge the bearish 50 DMA at $1,929 but failed to find any acceptance, as Gold sellers re-emerged.

The 14-day Relative Strength Index (RSI) indicator also flipped back into the negative territory, below the 50 level, suggesting that the downside remains more compelling.

The immediate support is now seen at the previous week’s low of $1,914, below which flloor would reopen toward the $1,910 round figure. The next relevant demand are is seen at the $1,900 mark.

On the flip side, a sustained break above the 21 and 200 DMA confluence of $1,926 is needed to take on the 50 DMA at $1,929 on again. Gold buyers will then target the downward-sloping 100 DMA at $1,941 if the abovementioned upside barriers are reclaimed decisively.