Gold Price Forecast: XAU/USD stays vulnerable amid rising US T-bond yields

Gold lost its traction after testing $1,800 on Thursday and ended up closing the week with small gains at $1,767. With the US Treasury bond yields continuing to push higher on Monday, XAU/USD is having a difficult time recovering its losses in a convincing way. As of writing, the pair was down 0.15% on the day at $1,765.

The benchmark 10-year US Treasury bond yield, which gained 4% and caused XAU/USD to fall sharply on Friday, is currently rising 2.85% on a daily basis at 1.619%. On October 11, the 10-year yield reached its strongest level since June at 1.636% and staged a deep correction in the first half of the previous week. With a daily close above that level, another leg higher could be witnessed and gold could come under renewed bearish pressure.

Meanwhile, the US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is moving sideways around 94.00 and limiting XAU/USD's downside for the time being. 

Moreover, the negative shift witnessed in risk sentiment following the disappointing third-quarter growth data from China earlier in the day seems to be allowing the precious metal to find some demand as a safe haven.

Nevertheless, investors are likely to continue to react to fluctuations in the US T-bond yields as the US economic docket will not be offering any high-tier data releases in the remainder of the day.

Gold near-term technical outlook

"The sellers eye the next support at $1760, where the SMA100 four-hour merges with the Bollinger Band one-day Middle," notes FXStreet Senior Analyst Dhwani Mehta. "If the bearish momentum accelerates, then the pivot point one-day S1 at $1756 will get challenged."

According to Mehta, $1765 is critical for gold buyers to initiate a meaningful recovery towards $1768, where the one-week Fibonacci 61.8% retracement is located.

Additional levels to watch for