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Gold Price Forecast: XAU/USD flirting with daily highs around $1,640

  • Gold recovers from its lowest level since April 2020, reached this Tuesday.
  • A slight pullback in US bond yields sparks USD profit-taking and underpins XAU/USD.
  • Aggressive Fed Rate Hike Bets, Boosting Risk Appetite Could Keep a Cap on the Safe Haven Commodity.

Gold attracts some buyers near the $1,620 zone and staged a nice rebound from its lowest level since April 2020, touched on Tuesday. The XAU/USD It maintains its bid tone in the mid-European session and is currently hovering around the $1,640 level, up more than 1% on the day.

The US dollar paused its recent rally and pulled back from two-decade highs reached on Monday amid profit-taking after a modest pullback in US Treasury yields. This, in turn, is seen as a key factor offering support to dollar-denominated gold. Dollar bulls remain on the defensive after the release of the US Durable Goods Orders data for August, which is unimpressive.

Despite dollar weakness, XAU/USD lacks bullish conviction on the prospect of aggressive monetary policy tightening by global central banks, including the Federal Reserve. Indeed, the US central bank signaled last week that it will raise interest rates at a faster pace at its upcoming meetings to rein in rising inflation. This could continue to act as a tailwind for US bond yields and the dollar.

It’s worth recalling that the rate-sensitive two-year US government bond yield rose to more than a 15-year high on Monday and the benchmark 10-year Treasury yield to the highest level. since April 2010. This supports the prospect of some buying on dollar declines. Aside from this, the risk boost could help keep a cap on any significant upside for non-yielding gold.

Even from a technical point of view, Friday’s break below the support of a one-week trading range around the $1,654 area favors the bears. This, in turn, suggests that any further move higher could still be seen as a selling opportunity. The Conference Board Consumer Confidence Index, New Home Sales data and the Richmond US Manufacturing Index will be released next.

The data could be of little use to give a new impetus. However, XAU/USD appears to have snapped a two-day losing streak for now and remains at the mercy of dollar price dynamics. Aside from this, US bond yields and general market risk sentiment could allow traders to take advantage of short-term opportunities around gold.

Technical levels to watch

XAU/USD

Overview
last price today 1639.68
Today I change daily 17.25
Today’s daily variation in % 1.06
Daily opening today 1622.43
Trends
daily SMA20 1690.98
daily SMA50 1729.86
daily SMA100 1772.75
daily SMA200 1827.51
levels
Previous daily high 1649.83
Previous Daily Low 1621.16
Previous Weekly High 1688.11
Previous Weekly Low 1639.85
Previous Monthly High 1807.93
Previous Monthly Low 1709.68
Daily Fibonacci 38.2% 1632.11
Fibonacci 61.8% daily 1638.88
Daily Pivot Point S1 1612.45
Daily Pivot Point S2 1602.47
Daily Pivot Point S3 1583.78
Daily Pivot Point R1 1641.12
Daily Pivot Point R2 1659.81
Daily Pivot Point R3 1669.79

Source: Fx Street

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