Gold Price Forecast: XAUUSD sticks to gains near $1,825, upside potential seems limited

• Gold regained positive traction on Tuesday and recovered a part of the overnight losses.
• Reduced bets for more aggressive Fed rate hikes, recession fears extended some support.
• Modest USD uptick acted as a headwind and kept a lid on any further gains for the metal.

Gold attracted some dip-buying on Tuesday and reversed a part of the overnight sharp retracement slide from the very important 200-day SMA. The XAUUSD held on to its modest gains through the early European session and was last seen trading just above the $1,825 level, up less than 0.15% for the day.

The recent sharp decline in commodity prices seems to have eased concerns about the persistent rise in inflationary pressures. This, in turn, forced investors to reassess the prospects for more aggressive rate hikes by the Fed, which was reinforced by the recent fall in the US Treasury bond yields. Apart from this, growing recession fears assisted the non-yielding gold to regain some positive traction.

Despite softening inflation expectations, investors remain worried that rapidly rising interest rates and tighter financial conditions would pose challenges to global economic growth. This was evident from the prevalent cautious mood around the equity markets, which offered additional support to the safe-haven gold amid expectations that some G7 countries plan to ban bullion imports from Russia.

As a way to tighten sanctions on Russia over its invasion of Ukraine, the US, UK, Japan, and Canada could announce a ban on new gold imports from Russia during the G7 summit this week. This was seen as another factor that contributed to the bid tone surrounding gold prices. The upside, however, remains capped amid a modest US dollar uptick, which tends to undermine the dollar-denominated commodity.

Even from a technical perspective, the recent repeated failures near a technically significant moving average favours bearish traders. It, however, would be prudent to wait for strong follow-through selling before positioning for any further near-term depreciating move. Traders now look forward to the US economic docket - featuring the release of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index, for some impetus later during the early North American session.

Technical levels to watch