Gold Price Forecast: Quick pullback from 1,800 area hints at further slides

Valeria Bednarik FXStreet

XAU/USD Current price: $1,793.93

US inflation is expected to have reached a record of 7% YoY in December.
US Federal Reserve Chair, Jerome Powell, is due to testify before the Senate.
XAU/USD met buyers around the 1,800 level as the dollar appreciates alongside bond yields.

Spot gold consolidates at around $1,794 a troy ounce, flat on a daily basis. The bright metal peaked at 1,802.32, giving up ahead of the US opening as demand for the American currency picked up. Market players are waiting for an update on US inflation. The country will publish the December Consumer Price Index expected at 7% YoY, up from a preliminary estimate of 6.8%. The core reading is seen jumping to 5.4% from 4.9%.

Concerns have led the way ever since the US Federal Reserve released the Minutes of its latest meeting, hinting at an urge to tame inflation. The Nonfarm Payrolls report bring some noise on Friday, but the focus returned to price pressures. Wall Street opened with a soft tone, extending losses as the session develops, while government bond yields jumped north, with the 10-year US Treasury note yielding as much as 1.80% on Monday.

Meanwhile, market players are waiting for US Fed Chief, Jerome Powell, due to testify on Tuesday on the renomination to chair the Federal Reserve Board of Governors before the Senate Banking Committee.

Gold price short-term technical outlook

The daily chart for the XAU/USD pair offers a neutral-to-bearish stance, as the metal hovers around a directionless 100 SMA, just below converging 20 and 200 SMAs, which also lack directional strength. Technical indicators, in the meantime, head marginally lower yet within neutral levels.

In the near term, and according to the 4-hour chart, the risk is skewed to the downside. The pair is battling with its 200 SMA, while meeting sellers around a bearish 20 SMA. At the same time, technical indicators have lost their upward strength within negative levels. The bearish case will be firmer on a break below 1,782.60, Friday’s low.

Support levels: 1,782.60, 1,770.10 1,761.90

Resistance levels: 1,798.30 1,809.50 1,820.15

View Live Chart for the XAU/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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