Gold Price Forecast: XAU/USD Bears Push Prices Down to $1,805

Due to the general strength of the US Dollar, the GOLD price (XAU/USD) has fallen for three days in a row, reaching its lowest level in a week. A 50 basis point rate hike by the Fed in March is now more likely after Federal Reserve (Fed) Chairman Jerome Powell announced a potential readiness for future rate hikes the day before, causing a huge decline in the price of yellow metal. Powell’s comments increased market participants’ anticipation of sustained higher Fed rates, which drove up yields on US Treasuries while putting pressure on the XAU/USD.

Yields on US 10-year Treasury bonds increased by 0.15 percentage points on Tuesday, to a final level of 3.97%, while those on 2-year bonds surged by 2.60 percentage points, to a high of 5.02%, their highest level since 2007. The GOLD price fell as a result of the greatest widening of the yield curve inversion in 42 years. Recent optimistic US data and rising tensions between China and the US over Taiwan have also contributed to the decline in the XAU/USD exchange rate.

In the coming days, investors will be keeping a tight eye on Fed Chair Powell’s second round of testimony and the US ADP Employment Change, an early signal for Friday’s US Nonfarm Payrolls (NFP).

Gold Technical Outlook

Yesterday, the GOLD price traded clearly in a bearish direction, confirming a break below 1828.70 and closing the daily candlestick below it. This has placed the market back under the correcting bearish pressure needed to achieve the next primary target of 1788.20.

The EMA50, which is exerting downward pressure on the price, provides support for the bearish channel’s predicted bearish wave.

But a positive stochastic current could slow down the expected bearish wave. The market is likely to be bearish today unless the price goes up above 1828.70 and then 1848.00 and stays there.