Gold Price Forecast: XAU/USD clings to modest gains below $1,820, looks fragile

Gold lost 0.3% on Tuesday and seems to have gone into a consolidation phase during the first half of the day on Wednesday. XAU/USD was last seen rising 0.2% on the day at $1,817 and investors remain focused on US Treasury bond yields.

The benchmark 10-year US T-bond yield reached its highest level in two years at 1.9% on Wednesday with investors reacting to speculations that the Fed could opt for a 50 basis points rate hike in March. Supported by surging yields, the US Dollar Index has already erased the majority of the losses it suffered last week. In case the 10-year yield rises above the key 2% mark, the dollar could continue to find demand and trigger another leg lower in XAU/USD.

Later in the day, December Housing Starts and Building Permits will be featured in the US economic docket but these data are unlikely to cause a noticeable market reaction.

Gold technical analysis

Gold continues to trade above the 100-period SMA on the four-hour chart, which is currently located near $1,810, suggesting that sellers remain on the sidelines for the time being. Supporting that view, the Relative Strength Index (RSI) indicator on the same chart has recovered to 50.

$1,820 (Fibonacci 23.6% retracement of the latest uptrend) aligns as first resistance. In case the pair manages to flip that level into support, it could target $1,824 (static level) and $1,830 (static level). On the downside, supports align at $1,810 (100-period SMA), $1,808 (Fibonacci 50% retracement) and $1,804 (Fibonacci 61.8% retracement).