|

Gold Price Forecast: XAU/USD marches firmly towards $1660 on falling US bond yields

  • Gold price rises as US Treasury bond yields fall due to market players’ expectations of the Fed slowing the pace of tightening.
  • The US housing market continues to deteriorate, while the CB Consumer Confidence missed estimations on inflation concerns.
  • Gold Price Forecast: Buyers need to clear $1668, to test the 50-DMA; failure will pave the way towards $1617.

Gold price advances early in the New York session, up by 0.33% courtesy of falling US Treasury yields, while bonds climb amidst the ongoing narrative in the markets that the US Federal Reserve might slow the pace of its rate hikes. All that said, the US Dollar (USD) weakened, a tailwind for the yellow metal. Therefore, XAU/USD is trading at $1655 a troy ounce at the time of writing.

Fallings US T-bond yields weaken the US Dollar, a tailwind for XAU

The sentiment is upbeat, as shown by global equities trading in the green. As previously mentioned, market players are positioning for a possible Fed pivot, while economic data in the US continues to show further deterioration in the country, which, coupled with high inflation and lower bond yields, boosted gold prices.

On Tuesday, US economic data flashed that the housing market, as shown by housing prices cooling down due to higher mortgage rates, which climbed to almost 7%, as the Fed embarked on a tightening cycle trying to tame inflation. Further data revealed by the Conference Board (CB), reported that Consumer Confidence dropped from 107.8 to 102.%, less than estimates of 105.9, decreasing for the second consecutive month, according to the survey.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board, commented that inflation is the primary concern, with gas and food prices serving as the main drivers. She added that “inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers.”

Aside from this, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, edges down by 0.88%, down at 111.00, weighed by falling US Treasury yields, as the 10-year rate slips from 4.230% to 4.089%.

XAU/USD Price Forecast: Technical outlook

XAU/USD remains downward biased, as shown by the daily chart, with price action remaining below the 20, 50, 100, and 200-day Exponential Moving Averages (EMAs). Gold unsuccessfully tested the 20-day EMA in the last seven days at around $1668, with prices falling afterward. So a break above the latter is needed to clear the way towards the 50-day EMA at $1690.63. Otherwise, a retest of the MTD low at $1617.30, ahead of $1600, is on the cards.

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

EUR/USD keeps the offered stance just above 1.1700

EUR/USD is coming under heavy selling pressure in what has been a rather grim start to the new trading week, with the pair now trading close to the 1.1700 support area as the US Dollar stages a solid rebound. The prevailing flight to safety mood continues to favour the Greenback, as investors react to the escalating conflict in the Middle East and trim risk exposure across the board.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold trims losses, back below $5,400

Gold now surrenders part of the earlier advance past the $5,400 mark per troy ounce at the beginning of the week. Indeed, the precious metal’s strong uptick remains fuelled by increasing geopolitical tensions in the Middle East amid the intense demand for safer assets.

Bitcoin on brink of breakdown amid US-Iran war

Bitcoin (BTC) remains under pressure near the key support level of $65,700. Trading at $66,400 at the time of writing on Monday, a breakdown below this critical level would suggest a deeper correction ahead.

The Fed is finally talking about AI – Here's why it matters for the US Dollar

AI is moving from earnings calls into the heart of monetary policy discussions, forcing Federal Reserve officials to confront a new question: How to act if AI reshapes inflation, employment and interest rates at the same time?

Grass 20% bullish breakout defies broader market weakness

Grass (GRASS) is edging up above $0.30 at the time of writing on Monday. The token’s notable 20% intraday surge stands out amid heightened volatility in the broader crypto market.