Gold Price Forecast: XAU/USD rebound appears elusive amid firmer United States Treasury yields

Gold price (XAU/USD) grinds higher around $1,960 as it snaps a two-day downtrend during early Tuesday, despite upbeat United States Treasury bond yields and sluggish US Dollar. In doing so, the XAU/USD traders seem to portray the month-end positioning ahead of the key US data while struggling to justify the risk-on mood.

Gold price recovery fails to justify firmer United States Treasury bond yields

Gold price prints the first daily gain in three as it ignores the firmer United States Treasury bond yields amid the sluggish US Dollar. That said, the US 10-year and two-year bond coupons marked the first daily gains in four the previous day as market sentiment improved amid policymakers’ push for more reforms to tame the banking fears. It’s worth noting that the US 10-year and two-year Treasury yields grind higher around 3.53% and 3.93% by the press time. It’s worth noting that the US Dollar Index (DXY) remains pressured and underpins the corrective bounce of the XAU/USD.

Easing banking fears tease XAU/USD sellers

Market sentiment improves the United States and European policymakers stretch emergency credit lines to the troubled banks and announced deposit insurance schemes. Recently adding strength to the risk-on mood were comments from the central bank officials pushing back the banking crisis concerns and the Silicon Valley Bank (SVB) deal.

Also taming the banking fears, as well as challenging the Gold buyers, are comments from the US Federal Reserve (Fed) officials and the Treasury Department. “Inflation ‘has started to come down’ with some of that due to tighter monetary policy and some due to other factors such as improving global supply chains,” said Fed’s Jefferson.  Further, Federal Reserve Vice Chair for Supervision Michael Barr's prepared testimony to Congress also favored the firmer sentiment as it read, “We are prepared to use all of our tools for any size institution as needed to keep the system safe". On the same line were comments from the US Treasury stating that the US will keep using tools to prevent banking contagion as needed.

Geopolitical fears, hawkish central bank talks also weigh on Gold price

It should be noted, however, that the geopolitical fears surrounding China and Russia also exert downside pressure on the Gold price. That said, talks about China’s failure to keep the pace of growth promised, as well as Russia’s alleged readiness to use nuclear weapons against Ukraine. On the same line are the latest comments from North Korean Leader Kim Jong Un who recently stated, per KCNA news, “(They) Should be fully ready to use nuclear weapons at any time.”

US CB Consumer Confidence eyed for intraday XAU/USD forecast

Looking ahead, the Gold traders will observe the US Conference Board’s (CB) Consumer Confidence for March, as well as the second-tier housing and activity data, to forecast intraday moves. However, major attention will be given to Friday’s Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index.

Also read: US Consumer Confidence Preview: No good news for Americans

Gold price technical analysis

Gold price fails to justify the previous day’s downside break of a one-week-old symmetrical triangle, while grinding higher past the 50-bar Exponential Moving Average (SMA). However, bearish signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as an absence of the oversold Relative Strength Index (RSI) line, placed at 14, tease XAU/USD bears.

While the theoretical target of an aforementioned triangle breakdown highlights the $1,840 level, the 100-EMA and 61.8% Fibonacci retracement level of the Gold price run-up from late February to early March, respectively around $1,927 and $1,882, could prod the XAU/USD bears.

On the contrary, a corrective bounce needs validation from the stated triangle’s lower line, close to $1,973 to convince the Gold buyers.

Following that, a downward-sloping resistance line from March 20, forming part of the triangle near the $2,000 psychological magnet, will gain the Gold buyer’s attention.

Also acting as an upside filter for the XAU/USD price is the monthly high surrounding $2,010, a break of which could propel the precious metal towards the previous yearly top of near $2,070.

Gold price: Four-hour chart

Trend: Further downside