Gold Price Forecast: XAU/USD rebounds inside weekly bearish channel, Covid, Treasury yields in focus
- Gold price picks up bids to snap four-day downtrend inside bearish chart pattern.
- US Dollar traces downbeat Treasury yields after mixed Fedspeak, softer US data.
- China’s daily Covid cases jump to seven-month high, chatters over Beijing’s XAU/USD buying also underpin recovery.
Gold price (XAU/USD) prints the first daily gains in four around $1,745 during early Tuesday morning. In doing so, the bright metal cheers the broad US Dollar retreat amid a likely sluggish day ahead of the key data/events scheduled for publishing on Wednesday.
That said, the US Dollar Index (DXY) drops to 107.55, down 0.25% intraday while snapping a three-day uptrend. The greenback’s gauge traces the US Treasury yields amid recent challenges to the hawkish concerns surrounding the US Federal Reserve (Fed).
The US 10-year Treasury yields print the first daily loss in four, down one basis point near 3.81% by the press time, as the latest comments from the Federal Reserve (Fed) officials fail to bolster the previously hawkish bias.
It should be noted that Federal Reserve Bank of Cleveland President Loretta Mester said in a CNBC interview, “I think we can slow down from 75 at the December meeting.” Previously, Atlanta Federal Reserve President Raphael Bostic also turned down the 75 bps move and challenged the DXY bulls. Additionally, downbeat prints of the Chicago Fed National Activity Index for October, to -0.05 compared to 0.17 prior, also challenged the US Dollar bulls.
On the other hand, seven-month high daily coronavirus cases from China renewed supply-crunch fears and keeps the US Dollar buyers hopeful ahead of tomorrow’s preliminary readings of the monthly activity data and the Federal Open Market Committee (FOMC) Meeting Minutes.
Additionally keeping the Gold buyers hopeful are the latest headlines from Nikkei Asia suggesting that China is likely stockpiling the metal while unloading the US Treasury bonds.
Also read: China thought to be stockpiling Gold to cut greenback dependence – Nikkei
Amid these plays, the S&P 500 Futures print mild gains whereas the stocks in the Asia-Pacific region trade mixed by the press time.
Looking forward, risk catalysts will be important to determine the intraday XAU/USD moves amid a light calendar for the day. That said, headlines surrounding China’s Covid conditions and expectations of the Fed’s next moves, as well as the US Treasury bond yields, will be crucial for clear directions.
Technical analysis
Gold price portrays a one-week-old bearish channel below the 50-SMA to keep the XAU/USD sellers hopeful. Also supporting the downside bias are the bearish MACD signals.
However, the RSI (14) rebound from the oversold territory underpins the recovery moves that challenge the bearish chart pattern, by approaching the stated channel’s resistance line surrounding $1,752.
That said, the XAU/USD run-up beyond $1,752 will need validation from the 50-SMA hurdle of $1,760 to convince the Gold buyers in challenging the monthly top surrounding $1,786.
On the flip side, a convergence of the previous resistance line from early October and the lower line of the aforementioned bearish channel highlights the $1,730 as the key support for sellers to conquer before retaking control.
Also acting as a downside filter is the 100-SMA support near $1,710 and the $1,700 threshold.
Gold price: Daily chart
Trend: Limited recovery expected