Gold(XAUUSD) price oscillates in a narrow trading zone. During Monday’s Asian session, consolidating last week’s advances to its highest level since mid-February.
Falling US government rates keep Dollar bulls on the defensive, supporting the metal.
The US Dollar begins the new week on a lower note as US Treasury bond rates continue to fall. Which works as a tailwind for US Dollar-denominated commodities.US bond rates will continue to boost USD demand. Which, together with wider risk sentiment, could help traders seize short-term chances around the gold price. Traders will draw cues from the publication of US Factory Orders data later in the early North American session. Yet, given the aforementioned mixed fundamental background. It is prudent to proceed with care before concluding that it has formed a bottom at the $1,800 level.
Hawkish Fed forecasts function as a headwind, preventing bulls from making aggressive wagers.
Oncoming economic threats bolster the safe-haven precious metal. Over the weekend, Chinese government authorities predicted that the Chinese economy will grow by 5% in 2023. Following a 3% increase in 2022. This dampens prospects for a quick rebound in the world’s second-largest economy. Adds to concerns about a deeper global economic slowdown. Nonetheless, the possibility of future Fed policy tightening may maintain a lid on inflation. For the time being, there is no major upside for the non-yielding yellow metal. Recent US macro statistics suggested that inflation is declining more slowly than expected. It pointed to an economy that is robust. Despite rising borrowing costs, which may allow the Fed to maintain its aggressive posture for a longer period of time. Nevertheless, many FOMC members have recently endorsed the argument for bigger rate rises to manage persistently rising inflation.
As a result, the market will continue to focus on Fed Chair Jerome Powell’s semi-annual congressional hearing . Remarks will be widely examined for hints regarding the Fed’s future rate-hike course. Which will play a crucial role in shaping the USD’s near-term trajectory. And providing a new directional push to the gold. This is for investors week will also see the release of the much-regarded US monthly employment report. Commonly referred to as the NFP, on Friday, before putting aggressive wagers on the XAUUSD.
Gold(XAUUSD) Technical Outlook
Technically, any future move up is more likely to see resistance at the $1,865-$1,870. The region includes the 38.2% Fibonacci level of the current fall from multi-month highs.
If the price of gold continues to rise, it might reach the 50% Fibo level, which corresponds to the $1,885-$1,886 horizontal barrier. This is followed by the 61.8% Fibo. level, which is located around the $1,900 round figure and, if strongly passed, might flip the near-term bias in favor of bullish traders and pave the way for some major upside.
On the other hand, the 23.6% Fibo. level, located around $1,842-$1,841currently appears to safeguard the immediate downside. before the $1,821-$1,820 horizontal support. If support levels are not held, the gold price may go back to the $1,805-$1,804 range.
Following-through selling below the $1,800 level, or the 100-day SMA, will be viewed as a new trigger for bearish traders, making the XAUUSD vulnerable to accelerating the decline towards the next significant support at the $1,775 horizontal zone.