XAUUSD SIGNAL : Gold Price Forecast: XAU/USD remains depressed below $1,950 level, over one-week low
- Gold Price remains vulnerable at the critical daily support amid mixed mood.
- Surging Treasury yields offset a broad USD retreat, keeping XAUUSD undermined.
- Focus on Wednesday’s close, with eyes on the Fed’s Beige Book.
XAUUSD SIGNAL : XAUUSD Gold extended this week’s retracement slide from the vicinity of the $2,000 psychological mark and witnessed some selling for the second successive day on Wednesday. The XAU/USD maintained its offered tone through the early European session and was last seen trading just above the $1,940 level, or a one-and-half-week low. Rising bets for multiple 50 bps rate hikes by the Fed, along with a likely hawkish stance for the rest of the year, turned out to be a key factor that exerted downward pressure on the non-yielding yellow metal.
In fact, St. Louis Fed President James Bullard opened gates for a more aggressive move and said on Monday that the US central bank shouldn’t rule out rate increases of 75 bps. Moreover, Chicago Fed President Charles Evans said on Tuesday that he is “comfortable” with a round of rate hikes this year that includes two 50 bps increases. Adding to this, Minneapolis Fed President Neel Kashkari – one of the more dovish FOMC members – noted that policymakers will need to take even more aggressive action to bring down inflation.
XAUUSD SIGNAL : The downside, however, remains cushioned amid modest US dollar pullback from the two-year peak, which tends to benefit the dollar-denominated commodity. Further, uncertainty around the Russia-Ukraine war could help limit losses for the XAU/USD. Meanwhile, growing acceptance that the Fed would tighten its monetary policy at a faster pace pushed the yield on the benchmark 10-year US government bond to a level not seen since late 2018. This should act as a tailwind for the USD and cap any meaningful recovery attempts in gold.
On the data front, there is nothing significant on the table and, therefore, all eyes will remain on the Fed’s Beige Book. The focus would then shift to a scheduled speech by Fed Chair Jerome Powell, due on Thursday.
Gold’s daily chart shows that the price is looking to defend the critical 21-Dailoy Moving Average (DMA) at $1,944, for now.
This could be seen as the 14-day Relative Strength Index (RSI) is still sitting just above the midline, keeping buyers hopeful.
XAUUSD SIGNAL : If Gold Price yields a daily closing below the 21-DMA support, then a fresh downswing towards the April lows of $1,915 cannot be ruled out.
Ahead of that, the ascending 50-DMA at $1,931 will challenge the bullish commitments.
On the upside, the road to recovery in XAUUSD could face initial resistance at the $1,950 psychological barrier.
Up next, Friday’s low of $1,961 could come into play, above which doors will reopen towards the $2,000 mark.
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