Crypto currency

Gold Price Forecast: XAU/USD flirts near $1,820 on lower US Treasury yields

  • Gold prints gains on Tuesday following the previous sessions downside momentum.
  • US Dollar Index stays below  93.00  on Fed’s official’s dovish stance, downbeat economic data.
  • Risk-aversion capped the downside for the precious metal.

After testing the high of $1,826.50  in the overnight session, gold prices continue to edge higher on Tuesday. The US Treasury yields continue to trade lower after FOMC Chairman Jerome Powell’s restrained from admitting the timeline when the central bank is likely to start scaling back its bond purchases.

Investors seek some bottom buying in the safe-haven asset amid rising Delta variant cases of coronavirus and the latest Fed’s dovish stance on the timing of interest rate hike, which is not happening any sooner. 

The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, remains under pressure on Fed’s Chair Powell’s comments and downbeat economic data, whereas the benchmark 10-year US Treasury bond yields touch nearly their one-week low near 1.27%. 

The lower US Treasury yields enhance the appeal of non-yielding bullion metal. The greenback steady from its recent fall after Fed Chairmen Powell did not provide a clear timeline for asset repurchase and interest rate hikes during the previous week’s Jackson Hole Symposium.

In addition to that, Fed president Loretta Mester that recent inflation readings did not justify the conditions to begin asset tapering.

The US Pending Home Sales data fell for the consecutive second month. The readings came at a lower 8.5%  on yearly basis in July, compared to market expectations of a 0.4% rise.

The supporting factors for the precious metal are disappointing global economic data, renewed coronavirus concerns,  China regulatory crackdown measures, and geopolitical tension in Afghanistan.

The upside in gold prices is capped by stability in equity markets and continuing Exchange Traded Fund (ETF) outflows. 

Technical levels

XAU/USD  daily chart

Gold prices extended the gains from the low of $1,687.78  made on August 9 and touched the high of $1,823.27  in the month of August The August series started on a subdued note while swinging back and forth in the narrow trade range of $1,800 and $1,830.

The ascending triangle from the low of the mentioned lower level levels acts as a defensive for the bulls. A break of the upper trendline would intensify the buying pressure in the gold prices.

The Moving Average Convergence Divergence (MACD)  trades near the midline. Any uptick in the MACD indicator would confirm the upside momentum. 

A sustained break of $1,830  would make the journey toward the north for the prices.

XAU/USD additional levels

 

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