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GOLD ANALYSIS : Gold Price Forecast XAUUSD eyes break below $1940 as hawkish ECB chatter sparks from upside in global yields

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GOLD ANALYSIS : Gold Price Forecast XAUUSD eyes break below $1940 as hawkish ECB chatter sparks from upside in global yields

  • The Gold Price has come under pressure again on Thursday amid a further rise in global yields and is threatening a break under $1940. 
  • Hawkish chatter from the ECB is the latest catalyst of recent yield upside. 
  • XAU/USD may retest the low $1900 is upcoming central bank speak triggers further yield upside.  

GOLD ANALYSIS : After stabilising on Wednesday, spot gold (XAUUSD) prices are in retreat once again and eyeing a break below the $1940 level and a test of their 50-Day Moving Average in the $1930s. Hawkish chatter from the usually dovish leaning Vice President of the ECB Luis de Guindos, who hinted towards a possible rate hike in July, echoing the sentiment of some of his more hawkish ECB policymaking colleagues earlier in the week, ignited a rally in Eurozone bond yields that has also seen US yields push higher. 

Yields rally, weighing on gold

The US 10-year was last up 4 bps on the day and eyeing a push back above 2.90% and towards multi-year highs set earlier in the week close to 3.0%. Higher yields increase the “opportunity cost” of holding non-yielding assets such as gold, hence why precious metals markets have come under pressures once again on Thursday. 

Central bank policymaker rhetoric looks set to remain in the spotlight for the remainder of Thursday’s session, with Fed, ECB and BoE speakers all giving remarks later in the day. Most notably, Fed Chair Jerome Powell will be rating at 1600BST and again at 1800BST alongside ECB President Christine Lagarde. 

Downside risks for gold

GOLD ANALYSIS : As markets become increasingly fatigued with the geopolitical newsflow relating to the Russo-Ukraine war and focus shifts more intensely to central bank tightening and the prospect of higher interest rates/tighter financial conditions, XAU/USD bears may target a drop back towards the low $1900s, and perhaps even a test of last months lows in the $1890 area. At the very least, XAU/USD seems likely to remain wedged within a $1900-$2000ish range for the foreseeable future. 

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