|

Gold Price Forecast: XAU/USD bulls cheer downbeat US Treasury bond yields, US Dollar

  • Gold price extends early week rebound, grinds higher of late.
  • United States inflation, Federal Reserve Minutes weigh on US Treasury bond yields, USD and inspire XAU/USD buyers.
  • Markets are in consolidation mode and hence Gold price pullback can’t be ruled out.
  • More clues of US inflation, risk catalysts eyed for clear directions

Gold price (XAU/USD) remains sidelined around $2,015, mildly bid during the three-day uptrend, as broad-based US Dollar weakness joins downbeat United States Treasury bond yields. Behind the moves are the latest United States inflation numbers and the Minutes of the Federal Open Market Committee (FOMC) Monetary Policy Meeting.

Gold price justifies softer United States inflation, unimpressive Federal Reserve Minutes

Gold price rose on Wednesday after the downbeat prints of United States inflation and no fresh or impressive details from the Minutes of the latest Federal Reserve (Fed) monetary policy meeting weighed on the US Dollar and Treasury bond yields, via Fed bets.

On Wednesday, the United States inflation measure, per the Consumer Price Index (CPI), dropped to the lowest level since May 2021, to 5.0% YoY in March from 6.0% prior and versus 5.2% market forecasts. However, the annual Core CPI, namely the CPI ex Food & Energy, improved to 5.6% YoY during the said month while matching forecasts and surpassing 5.5% prior.

That said, the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting signaled that the expectations for rate hikes were scaled back due to the turmoil in the banking sector, which in turn offered no fresh information and raised doubts on the hawkish Fed moves, apart from May’s 0.25% rate hike. “Several Federal Reserve policymakers last month considered pausing interest rate increases after the failure of two regional banks and a forecast from Fed staff that banking sector stress would tip the economy into recession,” mentioned Reuters.

Following the data, San Francisco Federal Reserve Bank President Mary Daly said that they had good news on inflation but added that she doesn't want to forecast the end of the tightening cycle. On the same line, Richmond Federal Reserve President Thomas Barkin said on Tuesday, in an interview with CNBC, that inflation certainly has peaked but warned that there are still ways to go. 

As the aforementioned catalysts flashed downbeat signals for the Federal Reserve’s next move, the US Dollar Index (DXY) dropped to a one-week low and the Treasury bond yields marked their first daily loss of the week. That said, the US 10-year Treasury bond yields snapped a three-day uptrend with mild losses to around 3.40% while the two-year counterpart also eased to 3.96% by marking the first daily negative in five.

More clues of US inflation eyed for fresh XAU/USD directions

Having witnessed that the initial signals of the United States inflation and the FOMC Minutes both suggest the Fed’s policy pivot and underpin the Gold price upside, the XAU/USD traders may pay attention to more details of inflation to reconfirm the bullish bias about the bullion. As a result, today’s United States Producer Price Index (PPI) for March and Friday’s preliminary readings of the Michigan Consumer Sentiment Index for April will be closely observed. Above all, the Fed talks and the yields are crucial for Gold traders to follow for clear directions.

Gold price technical analysis

Gold price remains well past the short-term key supports despite the latest inaction. Also keeping the XAU/USD buyers hopeful is the near-50 condition of the Relative Strength Index (RSI), placed at 14, as well as the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator.

That said, a one-week-old ascending trend line and the 200-Hour Moving Average (HMA), respectively near $2,003 and $1,995, can restrict the short-term downside of the Gold price.

Following that, the previous resistance line from March 20, close to $1,982 at the latest, may act as the last defense of the XAU/USD bulls.

Meanwhile, a sustained upside break of $2,032 could defy the chatters that the Gold buyers are off the ground by portraying a run-up toward the previous yearly high of around $2,070.

In a case where the XAU/USD remains firmer past $2,070, the record high of the $2,075 mark printed in 2020 will be in the spotlight.

Gold price: Hourly chart

Trend: Further upside expected

Additional important levels

Overview
Today last price2015.22
Today Daily Change11.39
Today Daily Change %0.57%
Today daily open2003.83
 
Trends
Daily SMA201973.27
Daily SMA501901.75
Daily SMA1001867.33
Daily SMA2001789.62
 
Levels
Previous Daily High2007.52
Previous Daily Low1988.88
Previous Weekly High2032.11
Previous Weekly Low1949.83
Previous Monthly High2009.88
Previous Monthly Low1809.46
Daily Fibonacci 38.2%2000.4
Daily Fibonacci 61.8%1996
Daily Pivot Point S11992.63
Daily Pivot Point S21981.44
Daily Pivot Point S31973.99
Daily Pivot Point R12011.27
Daily Pivot Point R22018.72
Daily Pivot Point R32029.91

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

EUR/USD: Breakdown below trading range support near 1.1770 comes into play

The EUR/USD pair opens with a bearish gap at the start of a new week as the US-Iran war-led global flight to safety boosts the US Dollar. Spot prices, however, lack follow-through selling and manage to hold above mid-1.1700s during the Asian session.

GBP/USD declines below 1.3450 on Middle East tensions, UK political uncertainty

The GBP/USD pair attracts some sellers to around 1.3420 during the early Asian session on Monday. The US Dollar edges higher against the Cable amid escalating tensions in the Middle East after recent US-Israeli strikes on Iran over the weekend.

Gold jumps over 2% toward $5,400 after US, Israel attack Iran

Gold is on fire at the start of the week, a widely expected move, as investors seek harbor in the traditional store of value, following the continued US and Israel attacks on Iran. The bright metal opened with a bullish gap of about $17 and rallied toward the $5,400 level as Asian traders hit their desks and reacted negatively to the weekend news of the Middle East conflict, rushing for cover in Gold.

Iran escalation: Quick thoughts on markets

Markets are likely to open the week with risk-off, with declines led by airlines, cyclicals and trade-exposed names, while energy, defense and “strategic” sectors may be relatively steadier.

Crisis in the Middle East: The market reaction

A primer on how markets will open on Monday, and why geopolitical risk may not be easily absorbed by financial markets this time around. Geopolitics and events between Iran, the US and the wider Middle East will dominate financial markets on Monday. The situation has continued to escalate as we move through Sunday. 

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.