Gold Price Forecast: XAU/USD steady around $1,860 amid falling US bond yields

Gold (XAUUSD) barely advance during the New York session, up 0.04%, trading at $1,861 at the time of writing. The non-yielding metal remained subdued in the overnight session, within the $1,850-68 range, despite US bond yields drifting lower with the 10-year benchmark note down almost six basis points, at 1.529%. Contrarily,  the US Dollar Index, which measures the buck’s performance against a basket of its peers, is advancing 0.45%, sitting at 95.98, after briefly piercing the 96.00 figure.

The market sentiment is downbeat at press time, with most US equity indices in the red, except for the heavy-tech Nasdaq Composite up 0.62%. Factors like increasing COVID-19 cases in Eastern Europe like Austria in a lockdown for 20 days, and Germany’s coronavirus cases spiking above March 2020 high, dented investors mood. Further, the health minister said he could not rule out another lockdown in Germany as infections surge aggressively in the largest Eurozone economy.

Indeed, gold seems to be trading on US inflation expectations, heavily influenced by real yields, leaving nominal on the side. As of November 18 data, real yields sit at -1.89%, one basis point higher than November 15.

XAU/USD Price Forecast: Technical outlook

The daily chart shows that gold is in consolidation, after retreating from weekly tops around $1,877, around the $1,860 area. Despite the abovementioned, XAU/USD keeps tilted to the upside, with the daily moving averages (DMA’s) located well below the spot price, with the 100-DMA above the 200 and the 50-DMA, respectively. However, the latter has a steeper upward slope, suggesting it is near a crossing over the 200-DMA.

In the abovementioned outcome, a golden cross would be formed, viewed as a strong bullish signal that could spur a rally towards $1,900. Nevertheless, it would find some hurdles on the way north. The first resistance level would be the November 16 high at 1877. A sustained breach of the latter would expose $1,900, a level that was last seen in June 11 of this year.

On the downside, the XAU/USD next support area would be, according to Dhwani Mehta, Analyst at FX Street, would be the “$1,857, the intersection of the Fibonacci 61.8% one-day and Fibonacci 23.6% one-week.”. Further, a break below the abovementioned level could send gold tumbling towards the confluence of the pivot point one-month R2 and the November 17 low around $1,849, which would be the last line of defense for gold buyers.