Gold Price Forecast: Bulls hesitate despite a better market mood

XAUUSD Current price: $1,712.46

• The market mood improved at the beginning of the week, but the focus remains on potential recession.
• US indexes trade in the green but pared gains as government bond yields advance.
• XAUUSD is bearish in the near term and could accelerate its slump once below the year low.

Spot gold trades around $1,712 a troy ounce, flat for the day. The bright metal advanced to $1,723.81 earlier in the day as the greenback struggles to find buyers. A better market mood pushed the greenback lower at the beginning of the week as stocks surged, backed mainly by encouraging earnings reports and expectations that the US Federal Reserve will refrain from tightening more than anticipated.

US indexes trade in the green but pared early gains as US government bond yields ticked higher, halting the dollar’s slide. Meanwhile, markets remain concerned about signs of slowing economic growth. Recession fears and persistent inflationary pressures have kept investors on their toes since the year's second quarter, and are likely to continue pressuring high-yielding assets.

Gold Price short-term technical outlook

The daily chart for XAUUSD shows that it trades near the 2020 yearly low posted last week at $1,697.56. It also shows that attempts to regain the upside remain limited. Technical indicators stay within oversold levels, lacking directional strength while moving averages maintain their firmly bearish slopes far above the current level.

In the near term, and according to the 4-hour chart, the risk remains skewed to the downside. The pair briefly traded above a mildly bearish 20 SMA, now back below it, while the longer moving averages keep heading south far above the shorter one. Technical indicators, in the meantime, develop below their midlines, with the RSI resuming its decline.

Support levels: 1,697.60 1,685.40 1,677.00

Resistance levels: 1,714.50 1,727.20 1,736.70

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