Gold Price Forecast: XAUUSD remains depressed below $1,850, bulls trying to defend 200-DMA

Gold met with a fresh supply on Friday and snapped a two-day winning streak.
Resurgent USD demand, the risk-on impulse turned out to be a key bearish factors.
The ongoing decline in the US bond yields offered some support and helped limit further losses.

Haresh Menghani FXStreet

Gold struggled to capitalize on its strong gains recorded over the past two trading sessions and witnessed some selling on the last day of the week. The XAUUSD remained depressed through the first half of the European session and was last seen trading just below the $1,850 level. Bulls, however, have managed to defend support at a technically significant 200-day SMA, warranting some caution before positioning for any further losses.

The US dollar caught aggressive bids and reversed a part of this week's retracement slide from a two-decade high amid hawkish Fed expectations. Investors seem convinced that the US central bank will stick to its aggressive policy tightening path to combat stubbornly high inflation. The bets were reaffirmed by the Fed's so-called dot plot, which showed that the median projection for the federal funds rate stood at 3.4% for 2022 and 3.8% in 2023. This, in turn, assisted the USD to snap a two-day losing streak to a one-week low and dented demand for the dollar-denominated gold.

Apart from this, the risk-on impulse - as depicted by a generally positive tone around the equity markets - further undermined the safe-haven precious metal. That said, the ongoing decline in the US Treasury bond yields offered some support to the non-yielding gold. Investors took comfort from the fact that the Fed forecasted the rate to decline to 3.4% in 2024 and 2.5% over the long run. This, in turn, dragged the US bond yields away from over a two-decade high touched earlier this week, which, along with mounting recession fears, could help limit deeper losses for gold, at least for now.

Market participants now look forward to the US economic docket, featuring Industrial Production and Capacity Utilization Rate for a fresh impetus later during the early North American session. Traders will further take cues from the US bond yields, the USD price dynamics and the broader market risk sentiment to grab short-term opportunities around gold on the last day of the week.

Technical levels to watch

XAU/USD

Overview
Today last price	1845.87
Today Daily Change	-11.43
Today Daily Change %	-0.62
Today daily open	1857.3

Trends
Daily SMA20	1848.46
Daily SMA50	1876.41
Daily SMA100	1889.96
Daily SMA200	1842.75

Levels
Previous Daily High	1857.58
Previous Daily Low	1815.73
Previous Weekly High	1876.01
Previous Weekly Low	1825.1
Previous Monthly High	1909.83
Previous Monthly Low	1786.94
Daily Fibonacci 38.2%	1841.59
Daily Fibonacci 61.8%	1831.72
Daily Pivot Point S1	1829.49
Daily Pivot Point S2	1801.69
Daily Pivot Point S3	1787.64
Daily Pivot Point R1	1871.34
Daily Pivot Point R2	1885.39
Daily Pivot Point R3	1913.19

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

GBP/USD surges to multi-day peaks past 1.3250

GBP/USD leaves behind Friday’s small pullback and advances past 1.3250 level, or five-day highs, on Monday. Cable’s upside follows extra losses in the Greenback, while traders continue to assess the geopolitical front and upcoming key events.

EUR/USD picks up extra pace north of 1.1400

EUR/USD extends its recovery past 1.1400 the figure as the NA session draws to a close on Monday. Indeed, the pair advances for the third straight day amid the persistent offered bias in the US Dollar. Meanwhile, market participants keep gearing up for the ECB Forum in Sintra and the release of critical US labour market data.

Gold struggles to attract investors

Gold remains under marked selling pressure, holding on just above the key $4,000 mark per troy ounce at the beginning of the week. The precious metal reverses two daily advances in a row as renewed effervescence in the Middle East revive inflation concerns and bolster Fed rate hike expectations.

Strategy unveils plan allowing Bitcoin sales to fund stock buybacks, dividends and reserves

Strategy (MSTR) has unveiled a Digital Credit Framework to strengthen the company’s financial standing. Under the new framework, the world’s largest corporate holder of Bitcoin (BTC) will pivot from its previous accumulation strategy, opting to sell BTC in order to boost liquidity, fund dividend payments, execute stock buybacks, and strengthen cash reserves.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.