- Gold prices fall on broad US Dollar strength across the board.
- Fed’s bond-taper prospects exert downward pressure in XAU/USD.
- Surging US bond yields weigh on the non-yielding metal.
- US spending bills and debt ceiling discussions keeps investors unease.
XAU/USD is slumping 0.75%, trading at $1,736 at the time of writing. The market sentiment is in risk-off mode as the Federal Reserve prepares to unwind its pandemic stimulus, triggering a rise in US bond yields, with the 10-year benchmark rate up three basis points (bps) sitting at 1.515%. Additionally, discussions regarding the increase of the debt ceiling and the spending bill in the US keep the market worried about the outcome.
Additionally, European stock indices printed losses between 0.51% and 2.59%, while across the pond, the four major indices are sliding between 1.47% and 2.50.
Higher US bond yield underpins the US Dollar Index (DXY)
The US Dollar Index, which tracks the greenback’s performance against a basket of six peers, climbs 0.32%, at 93.72.
In the meantime, Federal Reserve Chairman Jerome Powell is testifying before the US Senate. He told them that the central bank has “all but” met the bar to begin reducing the bond-pandemic stimulus, reinforcing that after ending the bond tapering process, it will not start immediately hiking rates yet.
In the same meeting, Treasury Secretary Janet Yellen warned that the Treasury would effectively run out of money around October 18 unless the US House and the Senate suspend or increase the federal debt limit.
That said, as investors keep unease about these factors, US bond yields could rise in safe-haven flows, dampening the prospects of higher gold prices.
XAU/USD Price Forecast: Technical outlook
Daily chart
XAU/USD is trading below its daily moving averages, supporting the bearish bias. After reaching a daily low at $1,728.17, it bounced off to settle at current levels. A daily close below the September 27 low at $1,744.88 could pave the way for further losses. The first support level would be the August 11 low at $1,724.28. A decisive break of that level would expose the August 10 low at $1,717.87, followed by the August 9 dip to $1,687.78.
On the flip side, if gold bulls would like to reclaim higher prices, they would need a daily close above $1,750.10 in their attempt to lift XAU/USD near the 50-day moving average (DMA) at $1,787.82.
The Relative Strength Index is at 35.70, heading south, supporting the bearish bias.
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
Editors’ Picks
AUD/USD holds above 0.6600 ahead of the US PMI, Fed’s Powell speech

The AUD/USD pair holds above the 0.6600 psychological mark during the early Asian session on Friday. However, the rebound of the US Dollar might cap the pair’s upside in the near term. Meanwhile, the US Dollar Index surges to 103.50 while the US Treasury bond yield edge higher.
EUR/USD suffers worst decline in months, stays below 1.0900

EUR/USD lost almost a hundred pips on Thursday, having the worst day in months. The Euro lost ground across the board while the US Dollar had a mixed performance after US data pointed to softer inflation and a more balanced labor market.
Gold eases as investors rush away from safety

Financial markets turned optimistic after US inflation eased further in November. Speculative interest increases bets of a shift in central banks' monetary policy. XAU/USD is in a bearish corrective decline in the near term, slide should remain limited.
XRP price could springboard above the 50-day SMA to forge a path north

Ripple price could springboard on the support provided by the 50-day Simple Moving Average, to forge a path north as the cryptocurrency market remains focussed to the SEC in eagerness to find out what the closed-door meeting was all about.
Salesforce rally helps Dow Jones outpace NASDAQ, S&P 500 on Thursday

Salesforce (CRM) is the main story on Thursday. The enterprise software company utilized artificial-intelligence-based (AI) integrations in its product suite to grow profits and revenue for the third quarter.