Gold Price Forecast: XAU/USD rebounds from YTD low, upside potential seems limited


  • Gold reverses an intraday slide to its lowest level since April 2020 amid a modest USD pullback.
  • Recession fears, a softer risk tone further extend some support to the safe-haven commodity.
  • Bets for more aggressive Fed rate hikes to limit the USD downfall and cap gains for the metal.

Gold stages a goodish bounce from its lowest level since April 2020 touched earlier this Monday and climbs to a fresh daily high during the early European session. Bulls, however, struggle to capitalize on the move beyond the $1,650 level and remain at the mercy of the US dollar price dynamics.

In fact, the USD Index, which measures the greenback's performance against a basket of currencies, surrenders its early gains to a fresh two-decade high amid a recovery in the European currencies. This, in turn, assists the dollar-denominated gold to attract some buyers near the $1,626 region. Apart from this, the prevalent cautious market mood, amid worries about a deeper global economic downturn, turns out to be another factor offering support to the safe-haven precious metal.

The attempted recovery, however, lacks follow-through buying, warranting caution before positioning for any meaningful upside. The Fed last week delivered another supersized rate hike and signalled that it will likely undertake more aggressive increases at its upcoming meetings to tame inflation. A more hawkish stance adopted by the US central bank remains supportive of elevated US Treasury bond yields and should limit any meaningful USD corrective slide, at least for the time being.

The yield on the rate-sensitive 2-year US government bond stands tall near a 15-year high and the benchmark 10-year Treasury note hits the highest in 11 years. This might further contribute to keeping a lid on the non-yielding gold. In the absence of any relevant economic data from the US, traders will take cues from speeches by influential FOMC members. This, along with the US bond yields, the USD price dynamics and the broader risk sentiment might provide some impetus to gold.

Technical levels to watch

XAU/USD

Overview
Today last price 1646.58
Today Daily Change 1.92
Today Daily Change % 0.12
Today daily open 1644.66
 
Trends
Daily SMA20 1696.71
Daily SMA50 1731.6
Daily SMA100 1775.07
Daily SMA200 1828.38
 
Levels
Previous Daily High 1675.92
Previous Daily Low 1639.85
Previous Weekly High 1688.11
Previous Weekly Low 1639.85
Previous Monthly High 1807.93
Previous Monthly Low 1709.68
Daily Fibonacci 38.2% 1653.63
Daily Fibonacci 61.8% 1662.14
Daily Pivot Point S1 1631.03
Daily Pivot Point S2 1617.41
Daily Pivot Point S3 1594.96
Daily Pivot Point R1 1667.1
Daily Pivot Point R2 1689.55
Daily Pivot Point R3 1703.17

 

 

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