Gold price turned green on Tuesday right after opening. Despite facing resistance from the 200 moving average, the daily candle still managed to remain red. The precious metal closed the day at $1922.92 after a slight 0.15% gain.
I was one of the few analysts who accurately predicted a strong bounce in XAU/USD from the $1810 level. There appears to be strong buying demand at that support level, which resulted in a more than 7% rebound. The next key levels to watch are the $1950 and $1980 levels.
The DXY index stood at 106.19% points on Tuesday despite positive retail sales data. The US economy experienced a 0.7% increase in retail sales in September 2023, beating market expectations of 0.3%. The market participants are waiting for Fed Chair Jerome Powell’s speech for further clues.
Gold Rises As Bond Yield Cools Down
The 10-year treasury bond yield rallied 2.68% on Tuesday after US retail sales figures outperformed the market expectations. However, the gold price remained in an uptrend and the yellow metal gained 0.41% from its previous close.
Investors are waiting for the Fed chair’s speech later this week as the threat of a further rate hike still looms. A hawkish stance might aggravate the fears of a prolonged tightening cycle.
According to the CME FedWatch tool, there is an 88.1% probability of no rate hikes in the next FOMC meeting. Furthermore, only an 11.9% chance of a 25 bps rate hike.
Gold Price Faces Resistance At 200 MA
After a massive rebound from the $1810 support level, the Gold price looks very strong. The price of the yellow metal is battling the 200 MA which is proving to be a strong resistance level. The chart below also shows the price successfully breaking out of the descending channel.
A retest of the $1980 support level will be on the cards, provided the price confirms its breakout from the descending channel. A prolonged correction in bonds and the DXY will further contribute to the gold price forecast to flip bullish. In this case, the bulls can expect a rally towards its all-time high of $2075.
