Gold Price Forecast: XAU/USD tests key support as bearish pressure mounts

Matías Salord FXStreet

XAU/USD Current price: $1,919.79

US Dollar Index hits monthly highs near 106.00.
US 10-year treasury yield rises to 4.52%.
XAU/USD is technically bearish, near $1,900.

XAU/USD turned downwards on Monday, erasing Friday's recovery. The yellow metal is near last week's lows, facing pressure from a firm US Dollar and higher Treasury yields. The impact from last week's Federal Reserve meeting continued to be felt as market participants position ahead of key US consumer inflation data on Friday.

The US Dollar Index (DXY) climbed on Monday, breaking firmly above 105.70 and reaching levels above 106.00. This marks the highest level since November of last year. The persistent strength of the US Dollar led to the DXY posting its tenth consecutive weekly gain.

The factors that boost the US Dollar also contribute to keeping pressure on the price of Gold. US Treasury yields remain near recent highs, with the 10-year yield climbing to 4.53% on Monday, reaching new multi-year highs. Expectations of higher interest rates for a longer duration have kept yields elevated. Meanwhile, the US Dollar remains strong, supported mainly by the outperformance of the US economy compared to the Eurozone and the UK.

XAU/USD price short-term technical outlook

The outlook is bearish for XAU/USD. On the 4-hour chart, technical indicators favor the downside, with the price well below key moving averages. The price is testing the $1,915 support area, and a break lower would expose a downtrend line, currently at $1,908. The latter serves as the last defence to $1,900.

The upside remains limited while below $1,930. If Gold rises above this level, bulls may take control, at least for a few sessions. Prior to $1,930, a solid short-term resistance is observed around $1,920.

Support levels: 1,908 1,901 1,885

Resistance levels: 1,921 1,930 1,945

View Live Chart for XAU/USD

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Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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