Gold Price Forecast: XAU/USD recovery falters as Oil and yields rise

XAU/USD picks up from two-month lows at $4,066, but it remains capped in the lower range of the $4,100s.
A strong recovery in Oil prices and US Treasury yields steady near long-term highs are keeping Gold's rallies limited.
Technically, the bearish trend remains in play while below the trendline resistance at the $4,200 area.

Guillermo Alcala FXStreet

Gold (XAU/USD) ticks up on Thursday, trading at the $4,125 area after bouncing up from two-month lows at $4.066 on Wednesday. Upside attempts, however, remain limited so far, as precious metals struggle with Oil appreciating amid escalating hostilities in the Middle East, and with US long-term Treasury approaching multi-decade highs again.

Crude Oil is appreciating sharply on Thursday, following reports of a fresh round of attacks by Houthi militias on Saudi Arabian airports, killing three people. Tensions between the Saudi government and the Houthis from Yemen have been rising over the last few weeks, as Riyadh supports the Yemeni government campaign against the Iran-backed militia, which has brought the conflict to a new phase and might lead to fresh attacks on the Saudi Oil infrastructure.

Higher energy prices, on the other hand, keep pushing Treasury yields higher, amid market expectations that the Federal Reserve (Fed) will need to raise borrowing costs further to combat inflation. This, so far, is underpinning speculative demand for the US Dollar (USD) and weighing on precious metals.

Technical Analysis: Support at the $4,070 area remains on the bears' radar

XAU/USD trades at $4,124, holding the bearish bias as it holds below the broken downward trendline resistance from late August highs. The Relative Strength Index (14) on the 4-hour chart remains below the 50 midline, and the Moving Average Convergence Divergence (MACD) is marginally negative, hinting at a moderate downside momentum.

Bulls need to breach the mentioned trendline resistance at $4,190 and preferably also the September 16 and 24 lows around $4,240 to gain conviction and shift the focus towards the September 25 highs at the $4,300 area.

Failure to do so would entice bears to retest Wednesday's low at $4,066, aiming for the late-July lows at the $4,000 psychological area.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

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