Gold Price Forecast: Death cross signals caution for XAU/USD bulls ahead of Fed

• Gold price is treading waters below $1,850 as risk-off flows dominate.
• US Treasury yields and DXY rebound as the Fed meeting begins on Tuesday.
• Death cross confirmation awaited on a daily closing basis, within a rising wedge.

Gold price resumed its uptrend after the recent correction on Tuesday, as bulls fought back control amid a flight-to-safety theme across the financial markets. Heightened geopolitical tensions between Russia and Ukraine, with NATO deploying forces on standby and reinforcing eastern Europe with more ships and fighter jets, spooked investors, as they sought shelter in the traditional safe-haven, gold. Meanwhile, concerns over aggressive Fed’s tightening also kept the market edgy. The risk-off flows accelerated into the US Treasuries as well, knocking down the yields to weekly troughs, in turn, boosting the appeal of the non-yielding gold. All in all, the fundamental factors favored gold’s rebound, although further upside remained capped, thanks to the solid turnround in the Wall Street indices on bargain buying.

As the two-day Fed meeting commences this Tuesday, gold price is treading waters near the recent range highs above $1,840, at the press time. The rebound in the US Treasury yields and the dollar amid pre-Fed repositioning is limiting gold’s upside. Although the prevalent downbeat mood, amidst Russia-Ukraine tensions and nervousness ahead of the Fed, offers support to the bright metal. The Fed is likely to stand pat on its monetary policy when it announces its decision on Wednesday, although some policy tweaks could be on the table, with a March lift-off a done deal.

Looking ahead, in absence of top-tier US economic data, the Fed sentiment and geopolitical developments will be closely followed for fresh near-term trading opportunities in gold price.

Gold Price Chart - Technical outlook

Gold: Daily chart

Gold price is looking to test the upper boundary of a month-long rising wedge formation, now aligned at $1,851.

However, gold bulls need to take out the two-month highs of 1,848 first. The 14-Relative Strength Index (RSI) has turned flattish, suggesting that bulls may be losing conviction.

A potential correction after refreshing two-month highs cannot be ruled out, as the daily chart displays a death cross. The 200-Daily Moving Average (DMA) has crossed the 50-DMA for the upside, flashing a bearish signal.

Gold traders are now awaiting the death cross confirmation on a daily closing basis for placing any fresh directional bets.

On the downside, immediate declines could be restricted by a strong demand area around $1,829, Friday’s and Monday’s lows.

The bullish 21-DMA at $1,818 will then come to the rescue of gold buyers. Further south, January 19 lows of $1,810 will be the next downside target.