As market activities resume, gold prices display modest fluctuations, persistently hovering just above the $2,020 threshold during the Asian trading hours.

The upward trend in U.S. Treasury yields, driven by favourable economic indicators from the U.S. and a string of hawkish remarks from Federal Reserve officials, has somewhat slowed the momentum for the precious metal. A generally optimistic market sentiment further tempers the allure of gold as a traditional haven.

Market Sentiment and the U.S. Dollar’s Influence

The restraint in the market is also due to traders’ hesitance amid uncertainties around the Federal Reserve’s interest rate trajectory for the coming year. This caution will persist until pivotal U.S. consumer inflation data is released.

Tuesday’s Consumer Price Index (CPI) figures could shed light on the Federal Reserve’s rate adjustment strategy, potentially influencing the U.S. dollar’s trajectory and, consequently, gold’s valuation. As the week progresses, easing geopolitical concerns in the Middle East may cap any potential rebounds for gold.

Interest Rate Outlook and Gold’s Prospects

Market participants increasingly accept the Federal Reserve’s inclination to sustain elevated interest rates, considering the U.S. economy’s enduring strength. This realization, coupled with recent comments from Fed officials advocating for a cautious approach to rate cuts, reinforces the headwinds faced by Gold.

Notably, Dallas Fed President Lorie Logan and Atlanta Fed President Raphael Bostic have expressed the need for tangible progress on inflation before considering rate reductions. Furthermore, revised data from the Labor Department indicating a slight uptick in consumer prices underscores the inflationary pressures, adding to the complexity of the Fed’s rate-cut calculus.

As the trading week begins, the absence of significant market activity due to holidays in Japan and China contributes to the muted price action observed in gold. Investors are expected to maintain a watchful stance, with many opting to stay on the sidelines in anticipation of the U.S. CPI data, which will offer clearer insights into the Federal Reserve’s policy direction.

With the easing of immediate geopolitical tensions following military developments in Gaza, the stage is set for a week of careful observation and strategic positioning in the gold market.

Gold Price Forecast: Technical Analysis

GOLD  price action on the 4-hour chart presents a restrained 24-hour change, currently trading at $2,023.68. The green line’s designation of the pivot point, $2,031.67, serves as a critical junction for potential price changes.

Resistance levels are layered above, with the first at $2,042.89, followed by $2,053.14, and a steeper climb points to $2,065.18.Conversely, support begins at $2,020.71, with further cushions at $2,011.35 and $2,002.00, respectively.

The Relative Strength Index (RSI) lingers at 41.20, suggesting some distance remains before an oversold state is reached, while the 50-day Exponential Moving Average (EMA) aligns with the pivot, indicating its role as a flexible support or resistance level.

The prevailing upward trendline hints at sustained support near $2,020, hinting at a potential rebound zone. The descent could extend towards $2,011 or lower if this level gives way.

The current trend leans neutral, advocating for purchases above the $2,020 pivot with a vigilant stop-loss, and sales beneath this threshold should bearish momentum ensue.

Gold XAU Live Chart