Gold Price Forecast: XAU/USD drops from $1,670 amid volatile DXY, BOJ’s intervention gossips escalate

Gold price has declined sharply after testing the $1,670.00 hurdle amid a wild DXY.
Market sentiment is highly positive as S&P500 futures have extended their gains.
The odds for a hawkish Fed policy have resurfaced firmly above 94%.

Sagar Dua FXStreet

Gold price (XAU/USD) has picked offers while attempting to cross the critical hurdle of $1,670.00 in the Tokyo session. The precious metal has sensed decent selling pressure as the US dollar index (DXY) has turned highly volatile amid gossip over the Bank of Japan (BOJ)’s intervention in the FX markets to support the Japanese yen.

The US dollar index (DXY) has revolved in a 111.47-112.27 range. It is likely to remain volatile until clarity over BOJ’s intervention as Japan’s top currency diplomat Masato Kanda has denied commenting on revealing any intervention plans.

Meanwhile, S&P500 futures have extended their upside journey following Friday’s positive sentiment in early Asia. Simultaneously, the returns on US government bonds have dented further despite a recovery in bets on hawkish Federal Reserve (Fed) policy. The 10-year US Treasury yields have dropped further to 4.21%. At the same time, the probability of a 75 basis point (bps) rate hike by the Fed carries more than 94% on the CME FedWatch tool at the press time.

Going forward, the US S&P PMI data will be of utmost importance. Per the market consensus, the Manufacturing PMI will decline to 51.2 vs. the prior release of 52.0 while the Services PMI will slash to 49.2 from 49.3 reported earlier.

Gold technical analysis

On an hourly scale, the Gold price has witnessed a stellar buying interest after testing the demand zone in a $1,614.85-1,621.60 range. The precious metal has crossed the 50- and 200-Exponential Moving Averages (EMAs) at $1,637.50 and $1,660.00, respectively.

It is worth noting that the 50-and 200-EMAs have not delivered a bull cross yet, which shows the strength of the gold bulls. Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates more upside ahead.

Gold hourly chart

XAU/USD

Overview
Today last price	1657.02
Today Daily Change	-0.33
Today Daily Change %	-0.02
Today daily open	1657.35

Trends
Daily SMA20	1665.97
Daily SMA50	1696.19
Daily SMA100	1739.67
Daily SMA200	1814.23

Levels
Previous Daily High	1658.24
Previous Daily Low	1617.35
Previous Weekly High	1668.53
Previous Weekly Low	1617.35
Previous Monthly High	1735.17
Previous Monthly Low	1614.85
Daily Fibonacci 38.2%	1642.62
Daily Fibonacci 61.8%	1632.97
Daily Pivot Point S1	1630.39
Daily Pivot Point S2	1603.42
Daily Pivot Point S3	1589.5
Daily Pivot Point R1	1671.28
Daily Pivot Point R2	1685.2
Daily Pivot Point R3	1712.17

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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