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XAUUSD Forecast As Gold Price Claws Back Against the Dollar

Gold prices have recovered losses incurred on Monday, rising 0.43% in 24 hours to trade at $2,042 at 11.54 am UTC at the COMEX futures market. The commodity has been on a four-day losing streak and still stands precariously as the market awaits the January US Core Inflation figures. The gold market has been on the receiving end of a resilient US dollar, which has retained the upper hand even while consolidating.

The US Bureau of Labour and Statistics is expected to release the Core Consumer Price Index (CPI), showing a cooling down of inflation in January to 3.4% from December’s 3.7%. A higher figure will favour gains by the US dollar against gold and vice versa. The Fed has reiterated that its high interest rates of between 5.25%-5.5% are hinged on the high inflation rates in the country. Therefore, a figure lower than the forecast will increase the chances of interest cuts sooner rather than later.

Gold’s gains on Tuesday are also as a result of falling US treasury yields. The 10-year bond yields stood at 4.19% at 8:05 am UTC, but were down to 4.17% at 12:12 UTC. Similarly, yields on the 5-year bonds fell from 4.144% to 4.121% during that period. Gold could also have made marginal gains from anxiety regarding the Middle East conflict as investors eye safe haven assets.

Technical analysis

The RSI on the 30-minute chart shows momentum for upside action to prevail. A bullish market looks more likely, with the pivot at 2,021.00. This could set up the market to test the first resistance at 2032.00. Further control by the bulls could see gold price head to the second resistance at 2037.00. In the alternative scenario, a price action below 2021.00 will signal likely bear control. The confirmation will come if the price breaches the first support at 2,017.00, at which point the bullish view will be invalid. Further control by the sellers could see the support move further down to 2012.00.

30-minute gold price chart