Gold Forecast: XAU/USD rises from weekly lows towards $1,825

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  • Gold is headed for a second straight week of losses, down 0.64% despite rising on Friday.
  • The 10-year TIPS (Treasury Inflation-Protected Securities) decline and US dollar weakness are a tailwind for gold prices.
  • Gold Price Forecast (XAUUSD): Gold has a neutral-bearish bias.

Gold (XAUUSD) bounces off weekly lows near $1,816, making up some ground on the week, above $1,825 courtesy of a soft US dollar amid a trading day with upbeat market sentiment and elevated Treasury yields of the United States. At the time of writing, XAUUSD is trading at $1,826.56, up 0.23%.

Sentiment improved despite the US S&P Global PMI on Thursday showing that the US economy is slowing. Fears of a US recession rose after the University of Michigan on Friday released Consumer Sentiment in its final reading for June, which fell to 50. However, inflation expectations, revealed in the same report , were reduced, which began to be discounted by market agents, who pushed back an aggressive Fed, which now expects the federal funds rate (FFR) to be around 3.50%.

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Before the opening of Wall Street, the president of the Saint Louis Fed, James Bullard, intervened in a panel with the governor of the Reserve Bank of Australia, Philip Lowe. He said fears of a US recession are overblown and commented that the US will be fine. He added that the policy tightening will slow the economy to a trend growth rate and foresees the need to bring the FFR closer to 3.50%.

At the time of this writing, San Francisco Fed President Mary Daly is giving remarks. She said the Fed does not need to think about the end point of the balance sheet yet, adding that the central bank would communicate about it. Daly has said that she does not see a recession.

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Meanwhile, the dollar index, which measures the value of the dollar against a basket of currencies, fell 0.16% to 104,238, against the 10-year US Treasury yield, which rose two basis points, with a yield of 3,117%.

On the other hand, 10-year Treasury Inflation-Protected Securities (TIPS), which represent US real yields, fell two basis points to 0.556%, which is a tailwind for the yellow metal, which typically benefits from lower real yields, increasing interest in precious metals.

Meanwhile, the US 10s-2s yield spread remains positive at 0.071%, although it remains close to 0%. A reading below 0% would imply that traders anticipate a US recession.

On Friday in the US economic calendar June consumer sentiment will be published in its final reading, along with other statements from the Fed.

Gold Price Forecast (XAUUSD): Technical Outlook

XAUUSD is consolidating, although it remains below the 200-day moving average (DMA) around $1,844.79, which suggests that the bias for gold is neutral-bearish. Additionally, the Relative Strength Index (RSI) is in bearish territory at 44.87, indicating that selling pressure remains on the unprofitable metal, but the lack of a catalyst to move the price above/below the range keeps it stuck in the $1,825-$50 zone.

To the upside, gold price resistance levels would be the 200-DMA at $1,844.79, followed by $1,850 and the 50-EMA at $1,861.07. To the downside, XAU/USD support levels would be $1,800, followed by May 16 low at $1,786.50 and year low at $1,780.18.

Technical levels

XAU/USD

Panorama
Last Price Today 1830.35
Today’s Daily Change 7.57
Today’s Daily Change % 0.42
Today’s Daily Opening 1822.78
Trends
20 Daily SMA 1843.36
50 Daily SMA 1864.23
100 Daily SMA 1891.73
200 Daily SMA 1843.72
levels
Previous Daily High 1846.15
Previous Daily Minimum 1822.59
Previous Maximum Weekly 1879.26
Previous Weekly Minimum 1805.11
Monthly Prior Maximum 1909.83
Previous Monthly Minimum 1786.94
Daily Fibonacci 38.2% 1831.59
Daily Fibonacci 61.8% 1837.15
Daily Pivot Point S1 1814.86
Daily Pivot Point S2 1806.95
Daily Pivot Point S3 1791.3
Daily Pivot Point R1 1838.42
Daily Pivot Point R2 1854.07
Daily Pivot Point R3 1861.98

Source: Fx Street

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