Gold Price Forecast: XAUUSD advances firmly above $1850 on weaker USD and falling real yields

• Gold is trimming weekly losses but remains down by 0.89%.
• Sentiment remains dismal, and the greenback fell, underpinned by plummeting US Treasury yields; gold rose.
• Gold Price Forecast (XAUUSD): Neutral-upwards above $1880; otherwise, would be exposed to selling pressure.

Gold spot (XAU/USD) remains steady above the 200-day moving average (DMA), which lies around $1843.19, as the Wall Street close approaches. Safe-haven demand and US dollar buyers taking profits weakened the greenback and lifted Gold prices, with XAU/USD trading at $1854.60, gaining 1.14%.

US equities remain on the backfoot, posting hefty losses. Risk aversion is keen late in the week after the US Federal Reserve raised rates by 75 bps on Wednesday afternoon, followed by Fed Chair Jerome Powell’s press conference.

Chair Jerome Powell said that he does not expect a move of 75 bps to be “common” but mentioned that the July meeting is open for a 50 or 75 bps rate hike. He also said that ongoing increases to the Federal funds rate (FFR) are appropriate and emphasized that inflation is extremely high.

In the meantime, the US Dollar Index, a gauge of the greenback’s value vs. a basket of peers, continues drifting lower, currently at 103.697, plunging 1.10%, underpinned by falling US Treasury yields

Besides the buck’s value and the US 10-year Treasury nominal yield, Gold traders need to be aware of real yields. The US 10-year Treasury Inflation-Protected Securities (TIPS) yield, a proxy for real yields, sits at 0.651%, down from daily highs at 0.893%.

Meanwhile, harmful US housing data shifted traders’ attention towards a recession scenario. Housing Starts in the US for May dropped by -14.4%, while Building Permits followed suit, edging lower by -7%. Furthermore, the Philadelphia Fed Manufacturing Index for June showed signs of a slowing US economy contracting by -3.3, much lower than estimations of 5.5.

Gold Price Forecast (XAUUSD): Technical outlook

Gold’s daily chart depicts the pair as neutral. On Thursday, Gold buyers reclaimed the 200-DMA, but to further cement the upward bias, they need a daily close above the June 13 high at $1878.65. Otherwise, XAUUSD would remain vulnerable to further selling pressure.

Upwards, the XAUUSD’s first resistance would be the 50-day moving average (DMA) at 1876.91. Break above would expose the aforementioned June 13 high, followed by the $1900 mark. On the other hand, XAUUSD’s first support would be June’s 16 low at $1814.68. A breach of the latter would expose the June 14 low at $1804.95, followed by the May 16 cycle low at $1786.50.

Key Technical Levels