Gold Price Forecast: XAU/USD falls below 20-Day EMA as Gold price surrenders to US bond yields rise

Gold price retreats after hitting a weekly high of $2009.34, drops as an uptick in US Treasury bond yields weighed on the yellow metal price. Though the XAU/USD dived below the 20-day Exponential Moving Average (EMA), a weak US Dollar (USD) capped its fall. The XAU/USD is trading at $1987, down 0.50%.

Gold price dulls amidst rising US bond yields and bearish XAU/USD signals

OF late, market sentiment shifted sour, as Wall Street’s turned negative, except for the Nasdaq. US economic data revealed in the day, namely Durable Good Orders surprisingly jumped by 3.2% MoM in March, exceeding estimates of 0.7%. Core Durable Good Orders, which exclude Transports, edged up 0.3% MoM, compared to a contraction of -0.2% estimated by the consensus.

Aside from this, US regional bank woes continued to dent investors’ mood, while a bid in US Treasury bond yields undermined appetite for the XAU/USD. The US 10-year Treasury bond yield advances four basis points, at 3.447%, but remains well below the opening week levels of 3.568%.

In the meantime, expectations for a US Federal Reserve (Fed) 25 bps rate hike in May, diminished, with odds at 76.1%, below the previous week’s 83.3% chance.

Regarding US politics, later news, the Republican Debt ceiling bill advanced in the US House of Representatives toward a debate and a possible vote.

Meanwhile, recession fears in the United States increased, as the US Atlanta Fed GDPNow for Q1 stands at 1.1%, versus a previous reading of 2.5%, ahead of the release on Thursday of Advance GDP figures for Q1 2023.

Besides that, the US economic agenda will feature Initial Jobless Claims for the latest week, alongside Pending Home Sales and Friday’s release of the Fed’s preferred gauge for inflation, the core PCE.

XAU/USD Technical Analysis

From a technical perspective, some signs suggest the XAU/USD could test the $1950 area in the near term. Firstly, the XAU/USD stays below the 20-day EMA, which sits at $1988.65, not far from the current price, but a daily close below the former, is a signal of bearishness. Moreover, the Relative Strength Index (RSI) accelerated its downtrend and is about to cross below the 50-mid line. That said, further downward action is warranted.

Hence, the XAU/USD first support would be the latest couple of weeks’ low at $1969.34, followed by the February 2 high at $1959.74, before falling to the confluence of the figure and the 50-day EMA at $1950.

Conversely, if XAU/USD reclaims the 20-day EMA, further sideways action between the $1980-$2000 area is expected.