Gold Price Forecast: XAU/USD bounces away from lows, but has no continuity

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  • Gold recovers part of its intraday losses amid the appearance of some selling around the dollar.
  • The Fed’s aggressive rate hike bets lift US bond yields and should act as a tailwind for the dollar.
  • The outlook for more aggressive central banks could also help cap XAU/USD.

Gold attracts some buying near the $1,640 level on Thursday and regains a lot of ground lost earlier. The XAU/USD It is once again close to the weekly highs reached the previous day and is trading around the $1,655 area during the early American session, although with a drop of more than 0.30% on the day.

The US dollar struggles to hold on to its intraday gains and falls to a new daily low in the last hour, which proves to be a key factor offering support to dollar-denominated gold. The dollar’s decline could be attributed solely to a nice rebound in sterling demand, although a combination of factors could help limit deeper losses.

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Investors seem convinced that the Federal Reserve will continue to raise interest rates at a faster pace to combat persistent inflation. These bets were bolstered by recent hawkish comments from a number of FOMC officials. This, in turn, triggers a further rise in US Treasury yields and should act as a tailwind for the dollar.

Furthermore, the prospect of more aggressive policy tightening by other major central banks could also help limit the rise in unprofitable gold. Therefore, it is prudent to wait for strong follow-on buying before confirming that XAU/USD has formed a near-term bottom and positioning for any further appreciation moves.

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That said, the prevailing risk-averse mood, amid growing concerns about a deeper global economic downturn and geopolitical risk, could lend support to the safe-haven precious metal. The mixed fundamental background warrants some caution for aggressive traders and further directional bets on gold.

Technical levels to watch

XAU/USD

Overview
last price today 1654.63
daily change today -5.31
Today Daily variation in % -0.32
Daily opening today 1659.94
Trends
daily SMA20 1683.67
daily SMA50 1727.47
daily SMA100 1768.74
daily SMA200 1826.07
levels
Previous daily high 1662.81
Previous Daily Low 1614.85
Previous Weekly High 1688.11
Previous Weekly Low 1639.85
Previous Monthly High 1807.93
Previous Monthly Low 1709.68
Daily Fibonacci 38.2% 1644.49
Daily Fibonacci of 61.8% 1633.17
Daily Pivot Point S1 1628.92
Daily Pivot Point S2 1597.91
Daily Pivot Point S3 1580.96
Daily Pivot Point R1 1676.88
Daily Pivot Point R2 1693.83
Daily Pivot Point R3 1724.84

Source: Fx Street

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