Gold Price Forecast: XAUUSD climbs to one-week high, lacks follow-through beyond $1,850

• Gold climbed to a one-week high on Friday amid a softer tone surrounding the USD.
• Recession fears further underpinned the safe-haven metal and remained supportive.
• A goodish recovery in the equity markets, Fed rate hike bets capped any further gains.

Gold built on the overnight strong move back above the very important 200-day SMA and gained some follow-through traction on the last day of the week. The XAUUSD maintained its bid tone through the early European session and was last seen trading near the $1,850 region, or over a one-week high.

The US dollar languished near a two-week low touched the previous day amid the recent sharp pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the dollar-denominated gold. Apart from this, concerns about softening global economic growth acted as a tailwind for the safe-haven XAUUSD and assisted spot prices to recover further from the multi-month low touched earlier this week.

The markets remain worried that a more aggressive move by major central banks to constrain inflation could pose challenges to global economic growth. Apart from this, the Russia-Ukraine war and extended COVID-19 lockdowns in China have been fueling recession fears. That said, a combination of factors might hold back traders from placing aggressive bullish bets around gold and keep a lid on any meaningful upside, at least for now.

The global risk sentiment recovered a bit after the People’s Bank of China (PBOC) cut its five-year loan prime rate by 15 basis points to counter an economic slowdown. Apart from this, expectations that the Fed would stick to its monetary policy tightening path over the next few months to bring inflation under control should cap gains for the non-yielding yellow metal. Nevertheless, gold remains on track to snap a four-week losing streak.

In the absence of any major market-moving economic releases from the US, the US bond yields will continue to play a key role in influencing the USD price dynamics. Apart from this, traders will take cues from the broader market risk sentiment to grab short-term opportunities around gold.

Technical levels to watch