Gold Price Forecast: XAU/USD remains depressed near multi-month low, just above $1,820 level


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  • Gold continues losing ground for the seventh straight day and drops to a fresh multi-month trough.
  • Hawkish Fed expectations, elevated US bond yields and bullish USD continue to weigh on the metal.
  • A softer risk tone fails to lend support, though oversold conditions could help limit any further losses.

Gold price (XAU/USD) prolongs its recent well-established downtrend for the seventh successive day and drops to the $1,820 area, its lowest since March 9 during the Asian session on Tuesday.

The Federal Reserve’s (Fed) higher-for-longer interest rate narrative pushes the US Treasury bond yields to a fresh multi-decade high and continues to underpin the US Dollar (USD), which, in turn, is seen undermining the Gold price. Investors now seem convinced that the US central bank will stick to its hawkish stance and have been pricing in the possibility of at least one more rate hike by the end of this year.

The bets were reinforced by Cleveland Fed President Loretta Mester, saying that risks to inflation remain tilted towards the upside and the US central bank will need to keep rates restrictive to get it back to the 2% target. This ensures that the Fed will continue to tighten its monetary policy and turns out to be another factor that further contributes to driving flows away from the non-yielding Gold price.

The ongoing downward trajectory, meanwhile, seems rather unaffected by a generally weaker risk tone, which tends to benefit the precious metal's safe-haven status. The initial market reaction to the mixed Chinese PMIs and the passage of a US stopgap funding bill over the weekend turned out to be short-lived amid worries about a deeper economic downturn, albeit does little to lend any support to the Gold price.

That said, the Relative Strength Index (RSI) on the daily chart is flashing extremely oversold conditions, which might hold back bearish traders from placing fresh bearish bets around the XAU/USD. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the Gold price is to the downside and any meaningful recovery attempt might still be seen as a selling opportunity.

Technical levels to watch

XAU/USD

Overview
Today last price 1823.3
Today Daily Change -4.51
Today Daily Change % -0.25
Today daily open 1827.81
 
Trends
Daily SMA20 1906.68
Daily SMA50 1918.75
Daily SMA100 1933.31
Daily SMA200 1927.73
 
Levels
Previous Daily High 1849.16
Previous Daily Low 1827.23
Previous Weekly High 1927.27
Previous Weekly Low 1846.37
Previous Monthly High 1953.01
Previous Monthly Low 1846.37
Daily Fibonacci 38.2% 1835.61
Daily Fibonacci 61.8% 1840.78
Daily Pivot Point S1 1820.31
Daily Pivot Point S2 1812.8
Daily Pivot Point S3 1798.38
Daily Pivot Point R1 1842.24
Daily Pivot Point R2 1856.66
Daily Pivot Point R3 1864.17

 

 

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