Gold Price Forecast: Can XAUUSD change its course?


Gold Price trades near a daily low of $1,910.64, pressured by the upbeat tone of Wall Street, regardless of a solid reason for such optimism. Inflation-related concerns retook centre stage following comments from US Federal Reserve chief Jerome Powell, who said that  “inflation is much too high,” and that he is ready to hike rates by 50 bps if needed to curb inflation. As a result, government bond yields soared to fresh multi-year highs.

But the US is not the only one suffering from prices pressure. Heating inflation is also a concern in Europe, exacerbated by the Ukraine-Russia crisis leading to soaring energy prices. Last but not least, a new wave of coronavirus is hitting Europe, with cases sharply up from a week ago. The current Wall Street momentum is keeping XAUUSD buyers sidelined, but that could quickly change at the sightless sign. The war and inflation are poised to be the main market drivers for some time now. 

On the war front, Moscow said that talks with Ukraine are ongoing but claimed they should be more active and substantive. Kyiv, on the other hand, said it would discuss the Crimea and Donbass situation after a ceasefire.

Also read: Gold Price Forecast: XAUUSD bulls to face an uphill battle amid hawkish Fed, Ukraine saga 

US 10-year Treasury yields have risen to a fresh high since May 2019 of 2.375% as the market’s fears of inflation magnified, pushing the Fed policymakers towards more aggressive monetary policies going forward.

On Monday, Atlanta Fed President Bostic and Richmond Fed’s Barkin promoted the US central bank’s ability to restrain inflation by indirectly signaling a faster pace of the rate hike. However, the comments from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary,” offered a major upside momentum to the T-bond coupons.

“Sharp moves in the US Treasury market are increasingly pointing to the risk of an approaching recession, with "bond vigilantes coming out of the woodwork" and markets doubting the U.S. Federal Reserve's plan to engineer a "soft landing" for the economy as it hikes interest rates to fight inflation, market experts said,” mentioned Reuters. On the same line were comments from International Monetary Fund’s (IMF) Asia-Pacific Director Changyong Rhee, who said, “The US has the room to raise interest rates.” IMF’s Rhee also mentioned that Asia’s inflation would peak in Q2 of this year.

Firmer yields help the US dollar Index (DXY) print a three-day uptrend around 98.70 while disappointing the riskier assets like commodities and Antipodeans, including Gold.

Gold Price technical analysis

XAUUSD has broken below the Fibonacci retracement of its 2022 rally at $1,925.20, now an immediate resistance level. The daily 20 SMA keeps providing dynamic resistance, now at $1,946, while technical indicators in the daily chart are stuck around their midlines, lacking clear directional strength. Gold Price is quickly approaching the $1,900 threshold, and a break below the latter exposes the weekly low at $1,985. The 61.8% retracement of the aforementioned rally comes at $1,890 a critical support level, as a break below it could mean a steeper sell-off.

Still, and given persistent tensions in Eastern Europe, the bearish potential remains limited. The ongoing optimism does not have enough support to be more than temporal and will likely fade unless the crisis suddenly ends. Gold buyers will be looking to renew their longs at lower levels, close to the next Fibonacci support.

  Gold Price 4-hour chart

XAU/USD

Overview
Today last price 1914.06
Today Daily Change -21.85
Today Daily Change % -1.13
Today daily open 1935.91
 
Trends
Daily SMA20 1945.02
Daily SMA50 1878.3
Daily SMA100 1841.76
Daily SMA200 1814.17
 
Levels
Previous Daily High 1940.68
Previous Daily Low 1918.15
Previous Weekly High 1990.22
Previous Weekly Low 1895.15
Previous Monthly High 1974.51
Previous Monthly Low 1788.67
Daily Fibonacci 38.2% 1932.07
Daily Fibonacci 61.8% 1926.76
Daily Pivot Point S1 1922.48
Daily Pivot Point S2 1909.05
Daily Pivot Point S3 1899.95
Daily Pivot Point R1 1945.01
Daily Pivot Point R2 1954.11
Daily Pivot Point R3 1967.54

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD moves below 1.0850 despite a bullish bias

EUR/USD moves below 1.0850 despite a bullish bias

EUR/USD extended losses to near 1.0850 during the Asian session on Wednesday. The pair faces challenges as the US Dollar gains ground amidst emerging risk aversion sentiment, possibly triggered by hawkish remarks from Minneapolis Fed President Neel Kashkari.

EUR/USD News

GBP/USD trims gains above 1.2750 amid US Dollar rebounds

GBP/USD trims gains above 1.2750 amid US Dollar rebounds

GBP/USD trades with mild losses around 1.2760 during the Asian session on Wednesday. The modest recovery of the US Dollar and US yields amid the diminishing expectations of a rate cut by the US Federal Reserve in September weighs on the major pair.

GBP/USD News

Gold buyers take a breather but technicals stay bullish

Gold buyers take a breather but technicals stay bullish

Gold price is posting small losses below $2,360, pausing a three-day recovery early Wednesday. The US Dollar resurgence acts as a headwind for the Gold price, despite heigthening Middle East tensions and a pick up in Indian physical Gold demand.

Gold News

Bitcoin long-term holders begin re-accumulation after Semler Scientific and Mt Gox make major whale moves

Bitcoin long-term holders begin re-accumulation after Semler Scientific and Mt Gox make major whale moves

Bitcoin declined briefly from the $70,000 mark on Tuesday as Semler Scientific and Mt Gox made notable whale moves. Glassnode also shared key on-chain insights that breathe clarity into the market's current state.

Read more

Inflation week: Eyes on Germany’s numbers, Eurozone and the US PCE

Inflation week: Eyes on Germany’s numbers, Eurozone and the US PCE

Today we get Germany’s numbers and on Friday, both the Eurozone and the US PCE. For the Eurozone, expectations are for core to remain the same at 2.7% and for the ECB to cut in June. This is being named a “hawkish cut,” one of those inherently self-contradictory terms.

Read more

Forex MAJORS

Cryptocurrencies

Signatures