Gold Price Forecast: XAU/USD bears flex muscles as United States Treasury bond yields rebound


  • Gold price justifies downside break of key support line as sellers attack one-month low.
  • Strong United States data underpinned recovery in US Treasury bond yields, US Dollar and weighed on XAU/USD.
  • US-China tussles add strength to geopolitical tension and favor Gold sellers.

Gold price (XAU/USD) holds lower ground near $1,865, after declining to the fresh one-month low the previous day. The metal’s latest weakness could be linked to the strong United States data renewing inflation fears, as well as downbeat rate hike performances of the European Central Bank and the Bank of England (BoE). Also exerting downside pressure on the XAU/USD is the fresh geopolitical tension surrounding the US-China ties. Above all, the recovery in the US Treasury bond yield renewed the US Dollar and recalled the Gold bears after a month-long absence.

United States data propel yields and Gold bears

Although the United States Federal Reserve (Fed) announced a dovish rate hike, the strong US economics surrounding jobs and activities renewed inflation fears and favored the odds of further rate increases from the Fed.

On Friday, the US Bureau of Labor Statistics (BLS) surprised markets by revealing that the Nonfarm Payrolls (NFP) rose by 517K in January, versus 185K expected and 260K (upwardly revised) prior. It’s worth noting that the Unemployment Rate also dropped to 3.4% from 3.5% prior and 3.6% expected but the Average Hourly Earnings eased during the stated month.

Other than the headline US job numbers, the rebound in the US ISM Services PMI from 49.2 to 55.2, versus 50.4 expected, also underpinned the rebound in the United States Treasury bond yields and the US Dollar.

That said, the benchmark US 10-year Treasury bond yields jumped the most since late September 2022 to regain 3.52% level by the volatile week’s end. The same propelled the US Dollar to recover from the lowest levels since April 2022 and weigh on the Gold price.

Downbeat European Central Bank, Bank of England also tease XAU/USD sellers

Last week, the European Central Bank (ECB) announced a 0.50% interest rate hike by matching the market expectations.

Following the interest rate announcements, ECB President Christine Lagarde said, “We haven't reached the peak in rate, we have ground to cover.” The policymaker also signaled that the risks to inflation and growth are more balanced.

On the other hand, the Bank of England (BoE) announced a 0.50% interest rate hike by matching the market expectations. Following the interest rate announcements, BoE Governor Andrew Bailey said, “BoE's forecast suggests inflation will come down, fall quite sharply.”

Asked if rates might have peaked, says "we have changed the language we used." BoE’s Bailey also added, "Change in language reflects a turning in the corner but very early days."

On a different pate, BoE Chief Economist Huw Pill told Times Radio on Friday that it's important for the BoE to not do "too much" on monetary policy, per Reuters.

US-China tension is extra burden for Gold

Other than the United States data and monetary policy moves at the European Central Bank (ECB), as well as at the Bank of England (BoE), the latest geopolitical tension surrounding the US and China also exerts downside pressure on the Gold price.

“A US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday, a week after it first entered US airspace and triggered a dramatic -- and public -- spying saga that worsened Sino-US relations,” said Reuters.

Federal Reserve Chair Jerome Powell’s speech, Sentiment data are the key

Looking forward, Gold traders should pay attention to Federal Reserve Chairman Jerome Powell’s speech and preliminary readings of the UoM Consumer Sentiment Index for February, as well as the University of Michigan's 5-year Consumer Inflation expectations, for fresh impulse. If Fed’s Powell manages to regain his hawkish bias, based on the recently firmer US data, the XAU/USD has a further downside to track.

Gold price technical analysis

Gold price broke key support lines stretched from November during the last week and pushed back the bullish bias, at least for now.

The downside expectations also take clues from the below 50 Relative Strength Index (RSI) line, placed at 40, as well as bearish signals from the Moving Average Convergence and Divergence (MACD) indicator.

That said, the XAU/USD declines to the 50-Day Moving Average (DMA), currently around $1,845, appear imminent.  However, multiple tops marked during the last December near $1,825-23 could act as the last defense of the Gold buyers.

Alternatively, an upward-sloping trend line from November 23, previous support surrounding $1,878, guards immediate recovery of the Gold price. Following that, a three-month-old support-turned-resistance line could challenge the XAU/USD bulls near $1,925.

Overall, Gold price is likely to witness further downside but the trend reversal is far from sight.

Gold price: Daily chart

Trend: Further downside expected

Additional important levels

Overview
Today last price 1864.86
Today Daily Change 0.00
Today Daily Change % 0.00%
Today daily open 1864.86
 
Trends
Daily SMA20 1914.36
Daily SMA50 1846.04
Daily SMA100 1766.47
Daily SMA200 1775.99
 
Levels
Previous Daily High 1918.65
Previous Daily Low 1861.45
Previous Weekly High 1959.8
Previous Weekly Low 1861.45
Previous Monthly High 1949.27
Previous Monthly Low 1823.76
Daily Fibonacci 38.2% 1883.3
Daily Fibonacci 61.8% 1896.8
Daily Pivot Point S1 1844.66
Daily Pivot Point S2 1824.45
Daily Pivot Point S3 1787.46
Daily Pivot Point R1 1901.86
Daily Pivot Point R2 1938.85
Daily Pivot Point R3 1959.06

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

USD/JPY grinds higher above 156.00 ahead of BoJ rate call

USD/JPY grinds higher above 156.00 ahead of BoJ rate call

USD/JPY attracts some dip-buying and advances above 156.00 on Friday amid some repositioning ahead of the key BoJ policy decision. The pair shrugs off hot Japan's core inflation. Trump-led risk-on mood undermines the safe-haven Japanese Yen, supportting USD/JPY. 

USD/JPY News
AUD/USD retakes 0.6300 amid Trump-led risk appetite

AUD/USD retakes 0.6300 amid Trump-led risk appetite

AUD/USD buyers re-attempt 0.6300 in Friday's Asian trading. US President Donald Trump said he would rather not have tariffs on China and lifted risk sentiment, boding well for the higher-yielding Aussie at the expense of the safe-havem US Dollar. The focus shifts to the top-tier US PMI data. 

AUD/USD News
Gold eyes more upside as focus shifts to US PMI data

Gold eyes more upside as focus shifts to US PMI data

Gold price regains poise and gears up for another run higher early Friday after taking a breather on Thursday. Gold buyers flirt with three-month highs near $2,760, awaiting some clarity on US President Donald Trump’s trade policies and the S&P Global preliminary US business PMI data.

Gold News
Bitcoin could resume rally as Trump signs executive order, calls US a Crypto and AI hub

Bitcoin could resume rally as Trump signs executive order, calls US a Crypto and AI hub

Bitcoin trades near $103,000 on Thursday, following President Donald Trump's executive order to create a Presidential Working Group on digital assets. The group will also oversee the feasibility of the US creating a national digital asset stockpile.

Read more
Federal Reserve set for an extended pause

Federal Reserve set for an extended pause

After 100bp of rate cuts the Fed has signalled it needs evidence of economic weakness and more subdued inflation prints to justify further policy loosening. President Trump’s low tax, light-touch regulation policies should be good news for growth.

Read more
Trusted Broker Reviews for Smarter Trading

Trusted Broker Reviews for Smarter Trading

VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures