Gold Price Forecast: XAU/USD consolidates gains below $1790 amid firmer yields

Update: Gold price is consolidating at the highest levels seen so far this week at $1789, as the buying pressure remains unabated amid a corrective decline in the US dollar across the board. Robust American corporate earnings reports have come to the rescue of gold bulls, as upbeat results drove the Wall Street indices to fresh record highs, weighing negatively on the dollar’ safe-haven demand. However, the upside attempts in gold price appear limited, as the US Treasury yields continue its run higher amid hawkish Fed’s bets and rising inflation expectations.

Gold traders now await the US weekly Jobless Claims and Fedspeak for fresh trading opportunities, as the broader risk sentiment will continue to remain the main market motor.

Read: US Dollar Index, gold, silver: A confluence of signs this week

Gold trades with minute gains on Thursday after testing the high near to $1,790 in the US session. The US benchmark 10-year Treasury yields rose above 1.65% reducing non-yielding bullion’s appeal. 

The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, trades lower below 94.00 with 0.02% losses, making gold attractive for the other currencies holders. The greenback weighed down as the expectations mounted of faster monetary policy tightening among other major central banks and as the global equity market extended the rally sapping demand for the greenback.
 
The US T-bond yields rise for the fourth-straight session at 1.66% with more than 1% gains, the highest in the five months. Investors remained optimistic about the US economic recovery amid strong corporate earnings amid higher inflationary pressures due to soaring energy prices. Gold is generally considered a hedge against inflation and currency volatility. A hawkish move by the major central banks would diminish gold’s appeal. 

XAU/USD daily chart

Gold prices posted gains of about $20 in the previous session after testing the high at $1,788 mark in the previous session. The prices crossed above the 21-day Simple Moving Average (SMA) at $1,759.23 on October 13. The descending trendline from the high of $1,834.02 made on September 3, acts as a strong resistance for the bulls.

The Moving Average Convergence Divergence (MACD) holds below the midline with a bullish crossover. Any uptick in the MACD indicator would amplify the buying pressure and the prices would approach Friday’s high of $1,796.50. A daily close above the mentioned level would entice bulls to retest the $1,810 horizontal resistance level. XAU/USD bulls could meet the September, 7 high at $1,827.32.

Alternatively, if the prices break below the intraday low, it could retrace back to the $1,770 horizontal support level. Furthermore, a successful break of the 21-day SMA at $1,760 could mean more downside for gold toward the $1,750 horizontal support level. A break of the mentioned support level would open the gates for the further lower levels, the bears will keep their eyes on the $1,730 horizontal support level.