Gold Price Forecast: XAU/USD capped at $1,770, returns to previous ranges

Gold futures’ appreciated on Tuesday, as inflation concerns hurt risk appetite, and the pair reached session highs at $1,770 before pulling back to $1,760 with the USD bouncing up as the US bond yields pare losses. The XAU/USD remains positive in the daily chart, yet still trapped within the last weeks’ horizontal range between $1,745 and $1,770/80.

Gold bulls lose steam as the USD picks up

Bullion is giving away ground on the afternoon US session, weighed by renewed USD strength. The greenback remains firm, fuelled by the firm advance on US treasury yields. The 10-year US T-Bond note has returned to levels past 1.60% after a weak opening, with the investors pricing that the Federal Reserve will soon announce the end of the Quantitative Easing era.

The US dollar index, which measures the value of the USD against a basket of the most traded currencies, remains firm, after bouncing from session lows at 94.25, to reach levels only a few pips shy of year-to-date highs at 94.50.

In the absence of first-tier macroeconomic releases, the market is focusing on September’s US Consumer Prices Index figures and the minutes of the FOMC, due on Wednesday, which could have a significant impact on the US dollar.

XAU/USD remains moving without a clear direction

From a technical perspective, gold prices remain trapped within a consolidative range, with upside attempts limited below $1,770 (October 5 high) and $1,780 (October 8 high) above here, bulls might gain confidence and push the pair towards $1,807 (September 14 and 15 highs).

On the downside, immediate support lies at $1,750 (October 10, 11, and 12 lows),  $1,745 (October 6 low), and below here, a key support area at $1,725 (September 29, 30 low).

Technical levels to watch