Gold Price Forecast: XAUUSD retraces below the 200-DMA and clings to $1830s despite soft US dollar

• Gold spot (XAUUSD) begins the week on the wrong foot, down some 0.12%.
• A risk-on impulse was a headwind for safe-haven assets and weighed much more in Gold.
• Gold Price Forecast (XAUUSD): Failure at the 200-DMA to send gold prices tumbling towards $1800.

Gold spot (XAUUSD) slides for the second consecutive day and fails to break above the 200-day moving average (DMA) at $1843.71, a zone briefly tested on Monday. However, bulls were quickly rejected, with sellers taking over and dragging prices below Friday’s close. At $1836.79, XAUUSD records losses of 0.05% amidst a thin liquidity trading session.

US real yields remain a headwind for gold prices, despite a softer greenback

Global equities recovered some ground, while US futures gained. The US Dollar Index, a measure of the buck’s value vs. a basket of its rivals, drops 0.31%, down at 104.314. The risk-on impulse courtesy of China’s Covid-19 news weighed in safe-haven status assets, in this case, Gold and the greenback. However, the uptick in real yields, as depicted by US 10-year Treasury Inflation-Protected Securities (TIPS) yield, unchanged at 0.648%, in positive territory, remains a headwind for the non-yielding metal.

In the meantime, speculation of the US reaching a recession begins to mount. Analysts at Nomura warned that tightening conditions, consumer sentiment souring, and energy and food supply distortions have worsened the global growth outlook.

“With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in the fourth quarter of 2022 is now more likely than not,” analysts at Nomura wrote.

Elsewhere, Fed speakers throughout the weekend crossed wires. Firstly, Fed Governor Christopher Waller said that he supported the 75 bps rate hike in June and will support another rate increase of that size in July if data comes as expected. Similarly, Atlanta’s Fed President Raphael Bostic said he endorsed the 75 bps rate hike last week and said they need to act decisively and affirmatively to get inflation under control.

Furthermore, Treasury Secretary Janet Yellen also mentioned her expectations of a slowing economy but ruled out recession concerns.

Gold Price Forecast (XAUUSD): Technical outlook

Last Friday’s fall below the 200-DMA opened the door for selling pressure. Although the yellow metal is in consolidation in the $1800-$1850 range, a move towards the bottom area of it is on the cards. Why? Gold’s failure to print a daily close above the 200-DMA, alongside the Relative Strength Index (RSI) pushing lower in negative territory and crossing below the RSI’s 14-period moving average (MA), gives enough reasons for bears to drag prices towards the $1800 area.

Therefore, the XAU/USD first support would be the Jun 1 daily low at $1828.33. A break below would open the door for a May 18 test at a $1807.23 cycle low. Once broken, a fall to $1800 is next.

Upwards, XAU/USD’s first resistance would be the 200-DMA. If XAU bulls achieve a daily close above it, a move towards the 50-DMA at $1874.80 is on the books. Once cleared, the XAU/USD following resistance level would be the 100-DMA at $1891.92.