Gold Price Forecast: XAU/USD sees upside risks intact, with eyes on the $2,000 mark


  • Gold price finds fresh demand in Asia early Wednesday, as risk flows cap the US Dollar rebound.
  • US bonds hold its recovery, keeping US Treasury bond yields undermined while supporting Gold price.
  • Gold price is carving out a potential Bull Flag pattern on the daily chart.  

Gold price is replicating the recovery moves seen in Asian trading on Tuesday, as buyers jumped back early Wednesday amid a pause in the United States Dollar (USD) rebound across the board and sluggish US Treasury bond yields.

Gold price cheers US Treasury bond yields downtick

The United States bond market is holding up its recovery mode, exerting downward pressure on the US Treasury bond yields. This, in turn, is helping the non-yielding Gold price. The recent weakness in the US bond yields is keeping the US Dollar turnaround in check, further adding to the Gold price uptick in Wednesday trading so far.

Additionally, the US Dollar also feels the heat of persistent risk-on flows, as investors cheer China’s approval of a trillion-yuan sovereign bond issue in a bid to stimulate economic recovery. “Also helping the mood was state-owned investment company Central Huijin announcing it was buying exchange-traded funds, a move which has sparked strong rallies in the past,” Reuters reported.

The steady retracement in the US Dollar on the back of an upbeat mood is aiding the renewed upside in Gold price. However, it remains to be seen if Gold price sustains the bounce, as the safe-haven US Dollar could regain poise on a renewed risk-aversion wave, which could be triggered by simmering Middle East tensions. Earlier this week, tensions calmed surrounding the Hamas-Israel strife after media outlets reported that US President Joe Biden pressured Israel to delay the Gaza ground invasion.

But President Joe Biden denied their intervention, noting that “the Israelis can make their own decisions.” Therefore, any escalation on the geopolitical front is likely to rush safety flows in the US Dollar. Gold price could also benefit in such a situation, extending its uptrend back toward $2,000.

On Tuesday, the US Dollar staged a solid comeback on the back of strong US S&P Global Manufacturing and Services PMI data and solid earnings results. S&P Global said its preliminary US Composite Purchasing Managers Index tracking both the manufacturing and service sectors rose to 51.0 in October, registering the highest level since July this year.

A major US Dollar turnaround triggered a fresh sell-off in Gold price toward $1,950. However, the extended correction in the US Treasury bond yields helped Gold price recover ground to settle marginally lower on the day at $1,971

Gold price technical analysis: Daily chart

From a short-term technical perspective, nothing seems to change for Gold price, as it still remains a ‘buy-the-dip’ trade. The 14-day Relative Strength Index (RSI) indicator is sitting just beneath the overbought region, suggesting that there is more scope to the upside.

Further, Gold price is carving out a porential Bull Flag formation, in the wake of this week’s consolidation that follows a relentless upsurge from the October low of $1,811.

The daily technical setup for Gold price remains in favor of bullish traders, with the immediate resistance now seen at the $1,980 barrier.

Acceptance above the latter is needed to challenge the July 20 high of $1,988. Gold buyers will then target the five-month highs of $1,997 en-route the $2,000 barrier.

On the flip side, if Gold sellers regain control, they would seek a sustained break of the October 23 low of $1,963. Further south, the $1,950 psychological level will be retested.

The line in the sand for Gold buyers is envisioned at the October 19 low of $1,945.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD rises on mixed US inflation, jobs data ahead of PPI

AUD/USD rises on mixed US inflation, jobs data ahead of PPI

The Australian Dollar snaps five straight days of losses and climbs over 0.35% as data showed that inflation in the United States was higher than foreseen, but a soft jobs report tempered the Greenback’s advance. The AUD/USD trades around 0.6738 and bounced off a daily low of 0.6699.

AUD/USD News
EUR/USD falls back as US CPI inflation data prints above expectations

EUR/USD falls back as US CPI inflation data prints above expectations

EUR/USD managed to maintain a finger grip on chart paper north of the 1.0900 handle. Fiber wound up closing lower, but recovered just enough to pull back from a deeper test of the 200-day Exponential Moving Average.

EUR/USD News
Gold price edges up after US CPI data, yet remains below $2,650

Gold price edges up after US CPI data, yet remains below $2,650

Gold prices recovered some ground on Thursday during the North American session, edging up some 0.67% after a hotter-than-expected US inflation report, which was tempered by soft US jobs data. Nonetheless, recent hawkish comments by a Federal Reserve official capped the precious metal’s advance.

Gold News
SEC sues Cumberland DRW for acting as an unregistered securities broker, Solana ETFs at risk

SEC sues Cumberland DRW for acting as an unregistered securities broker, Solana ETFs at risk

The Securities & Exchange Commission filed a lawsuit on Thursday against Chicago-based trading firm Cumberland DRW for operating as an unregistered securities dealer. The regulator mentioned several cryptocurrencies in the suit.

Read more
RBA widely expected to keep key interest rate unchanged amid persisting price pressures

RBA widely expected to keep key interest rate unchanged amid persisting price pressures

The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.

Read more
Five best Forex brokers in 2024

Five best Forex brokers in 2024

VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals. 

Read More

Majors

Cryptocurrencies

Signatures