Gold Price Forecast: XAU/USD edges lower amid recovering US yields as markets await new catalysts

The XAU/USD trades near the $1,970 level, recording a loss of 0.40%.
US yields recovered and traders await potential new catalysts to model their expectations on the next Fed moves on a quiet week.
The week’s highlights are the FOMC minutes on Wednesday.

Patricio Martín FXStreet

In Monday's session, XAU/USD is seeing 0.40% losses, trading mainly in the vicinity of $1,970. Key factors driving these changes include a slight recovery in US yields and an uptick in market caution as traders await the reveal of fresh catalysts to continue placing their bets on the Federal Reserve (Fed). In addition, markets continue assessing last week’s inflation data from the US and seek to see any clues in the Federal Open Market Committee (FOMC) minutes from the last November meeting which will be released on Wednesday.

In the last week, the yellow metal’s price gained momentum due to the increasing downward pressure on U.S. yields and the US Dollar due to the soft Consumer Price Index (CPI) figures from the US from October. On Friday, the 10-year yield dropped to 4.38% from its peak in late October at 5.02% to the lowest level since late September. Similarly, the 2- and 5-year rates dropped to their lowest point since September, towards 4.80% and 4.35%, respectively.

On Monday, those rates recovered to 4.90%, 4.47%, and 4.46%, which seems to me to be applying pressure to the non-yielding metal. The question that arises now is if one month of positive inflation figures will be enough to end the Fed’s tightening cycle. Any new evidence of inflation picking up or the economy being overheated can fuel hawkish bets on the Fed, which could affect the price.

XAU/USD levels to watch

The technical indicators on the daily chart reflect uncertainty in the short-term momentum. Despite this, the Relative Strength Index (RSI) enjoys a pleasant sojourn in positive territory, indicating an intact buying momentum. The Moving Average Convergence Divergence (MACD) exhibits flat green bars, signifying a potential deceleration in the bullish charm but not necessarily hint at a complete trend reversal.

In addition, the price is trading just below its 20-day Simple Moving Average (SMA), but above 100-day and 200-day SMAs, suggesting a broader bullish bias. This seemingly contrasts with the bearish short-term sentiment inferred from a recent stall in bulls' action. However, this outlook may also mean that the bulls are taking a breather after a 2.2% winning week before continuing their upward march.

Support Levels: $1,940 (200-day SMA), $1,930 (100-day SMA), $1,900.
Resistance Levels: $1,970 (20-day SMA), $2,000, $2,020.

XAU/USD daily chart

XAU/USD

Overview
Today last price	1972.03
Today Daily Change	-8.84
Today Daily Change %	-0.45
Today daily open	1980.87

Trends
Daily SMA20	1973.8
Daily SMA50	1927.39
Daily SMA100	1929.8
Daily SMA200	1937.15

Levels
Previous Daily High	1993.47
Previous Daily Low	1978.65
Previous Weekly High	1993.47
Previous Weekly Low	1931.67
Previous Monthly High	2009.49
Previous Monthly Low	1810.51
Daily Fibonacci 38.2%	1984.31
Daily Fibonacci 61.8%	1987.81
Daily Pivot Point S1	1975.19
Daily Pivot Point S2	1969.51
Daily Pivot Point S3	1960.37
Daily Pivot Point R1	1990.01
Daily Pivot Point R2	1999.15
Daily Pivot Point R3	2004.83

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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