Gold Price Forecast: XAU/USD eases from weekly top below $1,950 on USD rebound

• The gold price has moved higher on hawkish Fed policymakers.
• EU leaders summit and Biden meeting with its NATO counterparts will remain in focus.
• Gold bulls are firmer above 21 EMA.

Update: Gold (XAU/USD) pares the biggest daily gains in 12 days around $1,941 during the mid-Asian session on Thursday.

The yellow metal cheered the US Treasury yields retreat from three-year high the previous day to print notable gains. However, the bond coupons recover, underpinning the US dollar strength, amid the market’s anxiety ahead of the key data/events.

That said, S&P 500 Futures seesaws between gains and losses, up 0.11% intraday around 4,452 by the press time while the US 10-year Treasury yields retreated from a three-year high to 2.30% before regaining a 2.33% level at the latest.

The latest hawkish Fedspeak highlights the US PMIs for March and Durable Goods Orders for February. Also, the Ukraine-Russia tensions and the US readiness to slap more sanctions on Moscow emphasize President Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies in Europe.

Additionally, China’s covid update and fears emanating from the Middle East also can challenge the gold prices on a key day.

End of update.

Gold (XAU/USD) was juggling in a narrow range of $1,911.10-1,941.56 since the last week but now seems to come out of the woods and rally further despite headwinds of hawkish stance from the Federal Reserve (Fed)’s policymakers.

The precious metal seems underpinned by the market participants despite the rising odds of a 50 basis point (bps) interest rate hike by the Fed. San Francisco Fed Bank President Mary Daly in her speech on Wednesday claimed that interest rates may settle around 2.5%, which will be required to corner the soaring inflation while Cleveland Fed Bank President Loretta Mester favored 50 bps interest rate hikes by the Fed more than once by the end of 2022. It looks like the aggressive tightening stance from the Fed members has failed to tighten the gold prices.

The US dollar index (DXY) has been stuck near 98.50 and awaits a fresh wave in the risk-aversion theme for attracting bids. Meanwhile, the 10-year US Treasury yields have sensed minor weakness from its fresh two-year high at 2.42%.

Going forward, the economic calendar is full of mega-events on Thursday. US docket will reveal Initial Jobless Claims, Durable Goods Orders, and Markit (Manufacturing and Services) PMI on Thursday. However, the spotlight will remain on the EU leaders summit to discuss the embargo on Russian oil and US President Joe Biden meeting with his NATO counterparts to discuss the Russia-Ukraine tensions and approach for a diplomatic solution.

Gold Technical Analysis

XAU/USD has given a breakout of the falling channel, which has sent the gold prices near $1,945. The upper end of the falling channel is placed from March 17 high at $1,949.80 while the lower end is marked from March 18 low at $1,918.21. The Relative Strength Index (RSI) (14) is oscillating in a range of 60.00-80.00, which signals for the continuation of a bullish trend. The 21-period Exponential Moving Average (EMA) at $1,937.15 will act as major support for the counter.

Gold hourly chart