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Gold Price Forecast: XAU/USD struggles around $1930s, drops on buoyant US Dollar

  • Gold price is set to finish the week around $1920s after hitting a multi-month high of nearly $1938.
  • Thursday’s US economic data was mixed, showing that the labor market is far from portraying an upcoming recession.
  • Gold Price Analysis: The 100-DMA crossed above the 200-DMA, further cementing the upward bias.

Gold price retreats from multi-month highs ahead of the weekend due to the US Dollar (USD) recovering some ground and elevated US Treasury bond yields, despite recessionary fears around the US economy. Hence, the XAU/USD is retracing from daily highs of $1937.91, exchanging hands at $1926.42, down 0.28%.

Gold’s reman lackluster on a jump of US bond yields, and strong USD

The US equity markets opened in the green, portraying investors’ optimism. US big tech companies are reporting earnings, keeping investors positive. Layoffs reported by Microsoft, Amazon, and Google’s Alphabet, are grabbing the headlines ahead of the release of US housing data. Existing Home Sales are foreseen to drop to 3.96M compared to the last month’s reading of 4.09M, while the MoM reading is estimated to improve to -5.4%, from November’s -7.7% fall.

In the meantime, Thursday’s economic docket featured Initial Jobless Claims for the last week, printing 190K beneath the  214K expected and the lowest reading since September. In other data, US Housing Starts edged lower to 1.382M YoY vs. 1.358M estimated, and Building Permits fell to 1.333M vs. 1.365M projected.

The US Dollar Index (DXY), a measure of the American Dollar (USD) value against a basket of currencies, advances 0.38%, up at 102.447, taken off Gold’s bright ahead of the weekend. Additionally, the US 10-year benchmark note rate is yielding 3.459%, gaining six and a half bps, a headwind for XAU/USD.

Aside from this, Fed speakers continued their hawkish rhetoric that portrayed St. Louis and Cleveland Fed Presidents Bullard and Mester on Wednesday, each saying that rates need to be “slightly above” 5%. The Federal Reserve Vice Chair Lael Brainard said, “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2%.” That said, with Fed’s Brainard being one of the doves of the Federal Reserve Board, it reiterates the US central bank stance of holding for longer.

Gold Price Analysis: Technical outlook

Technically speaking, the XAU/USD uptrend is intact, further cemented by the cross of the 100-day Exponential Moving Average (EMA) at $1786.83, above the 200-day EMA at $1782.90. However, it could be subject to a deeper pullback as the Relative Strength Index (RSI) retraces from overbought territory and the Rate of Change (RoC) pushes above its higher reading in the week. XAU/USD key resistance levels lie at $1937.51, followed by $1950, ahead of the $2000 mark. On the flip side, Gold’s demand zones would be $1920.77, followed by the $1900 figure.

XAU/USD

Overview
Today last price1925.09
Today Daily Change-8.45
Today Daily Change %-0.44
Today daily open1933.54
 
Trends
Daily SMA201858.69
Daily SMA501809.31
Daily SMA1001741.99
Daily SMA2001776.2
 
Levels
Previous Daily High1935.27
Previous Daily Low1901
Previous Weekly High1921.96
Previous Weekly Low1865.22
Previous Monthly High1833.38
Previous Monthly Low1765.89
Daily Fibonacci 38.2%1922.18
Daily Fibonacci 61.8%1914.09
Daily Pivot Point S11911.27
Daily Pivot Point S21889
Daily Pivot Point S31877
Daily Pivot Point R11945.54
Daily Pivot Point R21957.54
Daily Pivot Point R31979.81

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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