Gold Price Forecast: XAU/USD rebounds from $1,850 as yields probe USD bulls ahead of US PPI

• Gold prices rebound from intraday low as US Treasury yields drop to fresh low in two weeks.
• DXY cheers risk-off but yields stay pressured amid mixed Fedspeak, anxiety ahead of US PPI.
• Headlines from China, Russia add to the sour sentiment, S&P 500 Futures refresh yearly low.
• Gold Price Forecast: For how long can the 200-DMA support hold?

Gold (XAU/USD) picks up bids from intraday low to pare daily losses around $1,853 amid the initial hour of the European session on Thursday. The yellow metal’s latest rebound could be linked to a slump in the US Treasury yields, which in turn tests US dollar buyers. Even so, the risk-off mood keeps gold buyers on their toes ahead of the US Producer Price Index (PPI) for April.

US 10-year Treasury yields dropped seven basis points (bps) to 2.84%, the lowest level since April 29. With this, the key bond coupon declines for the fourth consecutive day after refreshing the 20-year high on Monday. It should be noted that the US Dollar Index (DXY) remains firmer around 104.00, after refreshing a two-decade high of 104.21 earlier in the day.

The pullback in the yield could well be linked to the mixed comments from the Federal Reserve (Fed) policymakers. However, the US Dollar remains mostly firmer, despite recently easing, amid the risk-off mood.

That said, the US dollar struggles to cheer firmer inflation numbers, despite the latest uptick near a 20-year high, as policymakers have recently stepped back from bold calls. During early Thursday in Asia, the previously hawkish Federal Reserve Bank of St. Louis James Bullard mentioned that he ''won't emphasize single inflation report too much but inflation is more persistent than many have thought.''

Also contributing to the USD strength is the indecision over China’s covid conditions and Europe’s readiness for more sanctions on Russia. Furthermore, economic fears emanating from the UK’s latest economics also underpin the greenback’s safe-haven demand.

Even so, today’s US PPI for April, expected at 10.7% YoY versus 11.2% prior, will be important for the USD and gold prices.

Technical analysis

A convergence of the 50-HMA and ascending trend line from the previous day’s low, also the lowest since February, at around $1,849, restrict the immediate downside of the gold prices.

However, buyers need to cross the 200-HMA, at $1,868 by the press time, to aim for the $1,900 threshold.

Meanwhile, a sustained trading below $1,849 won’t hesitate to drag gold prices towards a refreshing three-month low, currently around $1,832.

Overall, gold prices remain pressured but the immediate downside seems limited.

Gold: Hourly chart

Trend: Corrective pullback expected