Gold Price Forecast: XAUUSD climbs to two-week high, around $1,865 area amid weaker USD

Gold kicked off the new week on a positive note and build on its recent goodish rebound from the $1,786 region, or the lowest level since late January touched last Monday. The XAUUSD extended its steady intraday ascent through the first half of the European session and climbed to a nearly two-week high, around the $1,863 zone in the last hour.

Given that at least 50 bps Fed rate hike move over the next two meetings is already priced, investors continued to unwind bets for any further US dollar gains. In fact, the key USD Index dropped to a near one-month low, which, in turn, was seen as a key factor that benefitted the dollar-denominated gold. That said, a combination of factors might keep a lid on any further gains for the precious metal, warranting caution for aggressive bullish traders.

Hopes that loosening COVID-19 lockdowns in China could boost the global economy remained supportive of the risk-on impulse. This was evident from a generally positive tone around the equity markets and reinforced by an uptick in the US Treasury bond yields, which could act as a headwind for the traditional safe-haven gold. Apart from this, expectations for a more aggressive policy tightening by the Fed might further contribute to capping the XAUUSD.

Investors seem convinced that the US central bank would need to take more drastic action to bring inflation under control. Hence, the market focus would remain glued to the release of the minutes from the latest FOMC monetary policy meeting on Wednesday. Traders will further take cues from important US macro data due during the latter half of the week before placing aggressive directional bets.

In the meantime, the USD price dynamics will play a key role in influencing intraday movement for gold prices. Apart from this, the broader market risk sentiment and the US bond yields would be looked upon for some short-term opportunities around the XAUUSD amid absent relevant market moving economic releases from the US.

Technical levels to watch