Gold Price Forecast: XAU/USD treads water around $1,930, in search of fresh direction

Gold price is keeping its weekly range trade intact around $1,930.
US dollar, yields capitalize on increased bets of a 50-bps May Fed rate hike.
Gold Price Forecast: Will XAU/USD close the week above critical 21-DMA at $1,935?

Sagar Dua FXStreet

Gold price is flatlined while trading within the mid of this week’s range around $1,930 so far this Friday. The market sentiment has somewhat improved in European trading, which has triggered a pullback in the US dollar and the Treasury yields. Although the underlying concerns over the aggressive Fed’s tightening and the Western sanctions on Russia are likely to keep the dollar bulls hopeful amid a data-light US docket. The Fed commentary continued to back the case for a 50-bps rate hike in the May meeting, dulling the demand for the non-interest-bearing gold price. The bulls need a decisive close above the 21-Daily Moving Average (DMA) at $1,935 to kick start a fresh uptrend. Attention now turns towards the critical US inflation data due next week. Meanwhile, the sentiment around the dollar and yields will continue to have a significant impact on the bright metal.

Read: Rates spark: Quantitative tightening pressure

Gold (XAU/USD) has tumbled below its principal cushion of $1,930.00 as the market participants are raising bets on settlement of the US dollar index (DXY) above the crucial resistance of 100.00. The precious metal is falling gradually in the Asian session after a mildly positive start on Friday.

The discussions over pushing the interest rate to its mean reversion by the Federal Reserve (Fed) policymakers are underpinning the greenback against the yellow metal. A preliminary estimate of the yearly US Consumer Price Index (CPI) at 6.6%, which will release next week, is dictating the story of soaring inflation. Federal Open Market Committee (FOMC) members have narrated the neutral rate at 2.4% at which demand will not dampen and growth will not de-escalate. To shift the current interest rates to the neutral rate, the Fed has already announced one or more interest rate hikes by 50 basis points (bps) out of the six interest rate hikes to be announced this year.

The DXY is trading around 100.00, seeking a trigger that will drive the asset higher. Meanwhile, the 10-year US Treasury yields are trading at 2.66%, at the press time and are looking to extend gains by overstepping a three-year high at 2.67%.

Gold Technical Analysis

On an hourly scale, XAU/USD is oscillating in a descending triangle formation whose horizontal support is placed at $1,915.50 while the descending trendline is plotted from March 31 high at $1,949.89. The 20- and 200-period Exponential Moving Averages (EMAs) are overlapping each other, which signals a consolidation ahead.

Gold hourly chart

XAU/USD

Overview
Today last price	1930.78
Today Daily Change	-1.08
Today Daily Change %	-0.06
Today daily open	1931.86

Trends
Daily SMA20	1935.64
Daily SMA50	1906.25
Daily SMA100	1854.63
Daily SMA200	1823.88

Levels
Previous Daily High	1937.85
Previous Daily Low	1920.62
Previous Weekly High	1959.63
Previous Weekly Low	1890.21
Previous Monthly High	2070.54
Previous Monthly Low	1890.21
Daily Fibonacci 38.2%	1931.27
Daily Fibonacci 61.8%	1927.2
Daily Pivot Point S1	1922.37
Daily Pivot Point S2	1912.88
Daily Pivot Point S3	1905.14
Daily Pivot Point R1	1939.6
Daily Pivot Point R2	1947.34
Daily Pivot Point R3	1956.83

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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