|

Gold Price Forecast: XAUUSD quick bounce supports a retest of the $2,000 level

One hour into the US session, XAUUSD has managed to recover some further ground after bottoming at $1,960.95 a troy ounce, Gold Price trades around the 1,980 level. Financial markets remain in risk-off mode amid the continued attacks of Russia over Ukraine. Wall Street started the day with modest losses and aimed to advance, but major indexes quickly turned red. The Nasdaq Composite is the worst performer, down 1.62% at the time being.

Meanwhile, demand for government bonds has pushed yields towards the lower end of their yearly range. The 10-year Treasury note currently yields 1.75%, far below the over 2% reached mid-February. The focus remains on the Russia-Ukraine war, and soaring commodities prices and their possible effects on already soaring global inflation. In this scenario, Gold Price is poised to maintain the bullish momentum and could retest its all-time high at around $2,075 a troy ounce.

Gold Price has been on the run ever since Russia began invading neighbour Ukraine, a couple of weeks ago, which resulted in soaring demand for safe-haven assets. XAUUSD soared throughout the first half of the day, but demand receded heading into the US opening, as stocks’ performance improved. At the time being, European indexes have trimmed most of their intraday losses, while Wall street kick-started the day with major indexes posting modest losses.

Previous update: Given the recent strong bullish run, slightly overbought conditions on short-term charts prompted traders to take some profit off their bullish positioning around Gold Price. Apart from this, a blowout US dollar rally was seen as another factor that acted as a headwind for the dollar-denominated commodity. That said, the downside remains cushioned amid worries about the potential economic fallout from a further escalation of the Russia-Ukraine war. The fundamental backdrop remains tilted firmly in favour of bullish traders and supports prospects for further gains. Hence, any meaningful pullback might still be seen as a buying opportunity for XAUUSD and is more likely to remain limited amid absent relevant market moving economic releases.

Read more: US Dollar Index Price Analysis: Immediately to the upside comes 100.00

Gold News: The latest on the Russia-Ukraine war

In the second round of peace talks last week, representatives from Kyiv and Moscow agreed on the creation of safe corridors, to evacuate civilians from some cities under attack. There are some places in critical situations, such as the port city of Mariupol, running for the sixth consecutive day without water or power.

No corridor was opened through the weekend amid Russian continued shelling on the region. On Monday, Moscow announced it would open evacuation corridors, although all the routes offered end in Russia or Belarus. 

Despite recently easing from the $2,000 threshold, gold (XAU/USD) prices remain on the front foot around a 19-month high as traders seek risk-safety amid the ongoing Russia-Ukraine jitters. That said, the quote eases to $1,988, up 1.0% on a day, while heading into Monday’s European session.

The yellow metal refreshed multi-day high earlier in Asia as risk-off escalated on the weekend news suggesting Russia’s intensified military invasion of Ukraine. On the same line were comments from the West suggesting an oil import ban from Russia. Further, UK Defense Chief Admiral Sir Tony Radakin also signaled further casualties in Kyiv as he believed, per The Times, “Russia could ‘turn up the violence’ with ‘more indiscriminate killing and more indiscriminate violence’ in response to resistance.”

Earlier on the day, Bloomberg said that the US weighs acting without allies on the ban of Russian oil imports.

While portraying the risk-off mood, S&P 500 Futures drop 1.30% whereas the US 10-year Treasury yields fall 2.5 basis points (bps) to 1.69% to portray the heavy risk-off mood.

It’s worth noting that Russia’s stand as the world’s third-biggest oil producer adds to the global supply crunch and strengthens commodities additionally.

As a result, gold buyers are likely to keep reins but the pullback moves can’t be ruled out should this week’s US inflation figures favor the faster Fed rate-hikes. That said, the US Nonfarm Payrolls (NFP) rose by 678K, well above the median forecast of a 400K figure and upwardly revised 484K prior during February. On the same line, the Unemployment Rate dropped to 3.8% versus 4.0% previous readings and 3.9% expected during the aforementioned month. Following the data release, Chicago Fed President and FOMC member Charles Evans mentioned, per Reuters, “The US central bank is on track to raising rates this year, though it may be ‘more than I think is essential to do so at every policy-setting meeting.”

XAUUSD technical analysis

Gold prices justify the latest bearish Doji on the four-hour chart while retreating from multi-day high amid overbought RSI conditions.

However, pullback moves remain elusive until the quote defies the last week’s triangle breakout, by declining below the previous resistance line of $1,928.

Ahead of that, February’s peak of $1,967 may also challenge the XAU/USD pullback.

In a case where gold prices drop below $1,928, the $1,900 threshold and an ascending support line from late January near $1,890 will test bears before giving them controls. Also acting as a downside filter is the 200-SMA level of $1,860.

Alternatively, the 61.8% Fibonacci Expansion (FE) of January-February moves, near the $2,000 psychological magnet, tests the metal’s immediate upside ahead of the theoretical target of the last week’s triangle breakout near $2,030. Following that, the August 2020 peak near $2,077 will be in focus.

Gold: Four-hour chart

Gold Price chart

Trend: Further upside expected

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD sits near a one-month top, above 0.7000 amid fresh USD selling

AUD/USD holds above 0.7000 through the Asian session, trading near a one-month high touched earlier this Monday amid renewed US Dollar selling. US bond yields decline further amid a modest pullback in crude oil prices, capping the USD recovery from a three-week low. Moreover, bets for a November RBA rate hike support the Aussie, though upside seems capped ahead of the crucial two-day FOMC meeting, starting Tuesday.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold sticks to modest recovery gains above $4,000 as Fed hike bets cap upside

Gold stages a modest recovery from the vicinity of a three-month low, trading above the $4,000 psychological mark through Monday’s Asian session amid a softer US Dollar. US President Donald Trump has ruled out immediate military action against Iran, triggering a modest pullback in crude oil prices. Furthermore, Federal Reserve officials have signaled no urgency to raise interest rates immediately.

Cardano's derivatives and on-chain data confirm bears in control

Cardano extends losses, trading below $0.202 after three consecutive weeks of more than 20% declines since early October. Selling pressure continues to build as weakening derivatives metrics, bearish on-chain signals and a deteriorating technical outlook point to further downside risks. Derivatives data shows a bearish bias for Cardano.

CFTC Report: WTI rally runs ahead of positioning
The week in one sentence: WTI prices surged while speculative longs were cut in the week to October 20, creating the clearest price/positioning divergence. Sterling and the Canadian Dollar led the constructive currency shift, while Yen longs also rebuilt. Speculators turned less constructive on the WTI, reducing their net exposure to around 89.3K contracts.
What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.