Gold Price Forecast: XAU/USD eyes weekly gain as United States Treasury bond yields retreat

• Gold price regains upside momentum after snapping three-day uptrend the previous day.
• Hopes of China’s strong economic rebound, US-China trade deal and mixed Federal Reserve talks seem to favor XAU/USD run-up.
• United States Treasury bond yields ease from multi-month high as Fed policy pivot talks regain market’s attention.
• US ISM Services PMI can direct Gold price ahead of the key week comprising Fed Chair Powell’s Testimony, US NFP.

Gold price (XAU/USD) returns to the buyer’s radar, after a brief absence the previous day, as the US Dollar traces a pullback in the key United States Treasury bond yields during early Friday. That said, the yellow metal approaches a weekly high while printing 0.18% intraday gains around $1,840 by the press time. It’s worth noting that the XAU/USD marked the first daily loss in four the previous day as the US Treasury bond yields propelled the US Dollar amid hawkish Federal Reserve (Fed) talks and challenges to sentiment before the table turned during late Thursday.

United States Treasury bond yields retreat from multi-month high

After a stellar rally to the multi-month top, the United States Treasury bond yields eased late Thursday and extended the pullback amid early Friday morning, which in turn allowed the Gold buyers to retake control via the softer US Dollar.

On Thursday, US 10-year Treasury bond yields rose to a fresh high since early November 2022 while piercing the 4.0% threshold whereas the two-year counterpart rallied to the highest levels since 2007 to 4.94%. However, the bond coupons retreated from their multi-month high as of late. That said, the 10-year coupons drop two basis points to 4.05% while its two-year counterpart seesaws around 4.89% by the press time.

Fresh chatters of Federal Reserve policy pivot renew Gold price run-up

Having witnessed a series of hawkish Federal Reserve (Fed) comments, Thursday’s statements from Federal Reserve Bank of Atlanta President Raphael Bostic renewed concerns about the Fed’s policy pivot as the decision-maker said, “The central bank could be in position to pause the current tightening cycle by mid to late summer.” It should be observed, however, that Boston Fed President Susan Collins kept supporting the higher rates for longer as she said, “More rate hikes are required to bring inflation back in control.”

Not only the Fed talks but the latest Reuters poll on the US Dollar also renew the policy pivot talks and weigh on the US Dollar, as well as propels the Gold price. “A weaker greenback in a year amid an improving global economy and expectations the US Federal Reserve will stop hiking interest rates well ahead of the European Central Bank,” per Reuters poll. The February 28 to March 2 poll of 69 currency specialists also mentioned that the dollar was forecast to trade lower than current levels against all major currencies in the next 12 months.

China-inspired optimism, mixed US data also favor XAU/USD bulls

Apart from the yields, hopes of China’s economic recovery, the US-China trade deal and mixed United States data also allow the Gold price to remain firmer.

China’s Caixin Services PMI traced the latest activity data for the dragon nation while printing 55.00 figures for February, versus 50.0 market forecasts and 52.9 previous readings.

Elsewhere, the US-China tension at the Group of 20 Nations (G20) meeting, amid the former’s push for sanctions on countries having strong ties with Russia and aiding Moscow in war with Ukraine, previously probed the Gold price. However, chatters of the likely resumption of the Sino-American trade talks seemed to have pushed back the risk-off mood afterward and allowed the XAU/USD to recover.

Talking about the United States data, the US Jobless Claims dropped to 190K during the week ended on February 24 versus 195K market forecasts and 192K prior. Further, Nonfarm Productivity for the fourth quarter (Q4) eased to 1.7% from 3.0% prior and 2.6% market forecasts while the Unit Labor Costs jumped 3.6% versus 1.6% analysts’ estimations and 1.1% previous readings.

US ISM Services PMI will be the key ahead of Powell’s Testimony, NFP

Looking ahead, Gold price is likely to extend the latest recovery amid fresh Federal Reserve policy pivot talks. However, the US ISM Services PMI for February, expected at 54.5 versus 55.2 prior readings, will be crucial to watch for intraday directions. Above all, the next week’s Federal Reserve (Fed) Chairman Jerome Powell’s Testimony and the monthly US jobs report for February, encompassing the key Nonfarm Payrolls (NFP) will be the key for clear directions of the XAU/USD.

Gold price technical analysis

Gold price remains on the front foot above the 200-Hour Moving Average (HMA) as it adds to the first weekly gain in five. Adding strength to the XAU/USD upside bias is the upward-sloping support line from Tuesday, around $1,832 by the press time.

It’s worth noting that the bullish bias of the Moving Average Convergence and Divergence (MACD) indicator joins the recently firmer Relative Strength Index (RSI) line, placed at 14, to keep buyers hopeful.

However, a clear upside break of the fortnight-old resistance line, close to $1,843, becomes necessary to convince the XAU/USD bulls.

Also acting as a short-term upside hurdle for the Gold price is the 50% Fibonacci retracement level of the February 09-28 downturn, near $1,848, a break of which could propel the quote towards the tops marked on February 10 and 14, near $1,870.

Meanwhile, Gold’s pullback needs to conquer the immediate support line near $1,832, as well as the 200-HMA support surrounding $1,827 to convince sellers.

Even so, a horizontal area comprising multiple levels marked since February 17, close to $1,820-18, could act as an extra check for the XAU/USD bears before directing them to the previous monthly low of around $1,804.

To sum up, Gold price portrays a bullish consolidation ahead of the aforementioned key fundamental catalysts.

Gold price: Hourly chart

Trend: Recovery expected