Gold Price Forecast: XAUUSD pressures the upper end of the weekly range

• Wall Street futures trimmed Tuesday’s gains as optimism faded.
• The better performance of the US dollar undermines gold demand.
• Gold bounces modestly from a Fibonacci level at $1,925.00 remains range-bound.  

Spot gold accelerated its advance and reached a fresh daily high of$1,93 a troy ounce, helped by the poor performance of US indexes. The Dow Jones Industrial Average opened 200 points lower, having ever since extended its slump to currently trade roughly 230 points lower. The S&P 500 shed 0.73% at the time being, while the Nasdaq Composite trades some 110 points lower.

Sentiment-related trading has been the main theme ever since Russia invaded neighbour Ukraine, which initially sent Gold Price towards its record highs in the $2,070 price zone. The crisis continued to escalate on a daily basis, but demand for the safe-heaven metal receded on the back of the broad dollar’s strength. Additionally, the greenback benefited from a more aggressive US Federal Reserve stance on monetary policy, as current actions to tame inflation have probed insufficient.

US Treasury yields are playing an important role in the market’s direction. Government bonds had pared their Tuesday’s slump, but not before the yield on the 10-year Treasury note peaked at 2.417%, a fresh multi-month high.

The soft tone of equities is being exacerbated by soaring oil prices. In the absence of relevant macroeconomic figures, financial markets rotate around the Russia-Ukraine crisis. Crude oil prices are once again on the run, following some comments coming from Moscow. President Vladimir Putin said that they intent to use Russian rouble when selling gas to “non-friendly” countries, clarifying that they will respect their contracts on supply. The barrel of WTI is currently changing hands at $113.65, its highest in two weeks. Higher oil prices provide unexpected support to Gold Price. 

Also read: Gold attempts to rebound after testing key support

XAUUSD Technical Outlook

XAUUSD has spent the week hovering around a Fibonacci level, the 50% retracement of this year’s rally at $1,925.20. Movements away from the level have been shallow, although Gold Price bottomed the previous week near the next Fibonacci support level at $1,980.00, while intraday advances fell short of nearing the 38.2% retracement at $1,960.00. Market participants are looking for a clear break of any of those extremes for more sustained directional strength.

Technical readings in the daily chart suggest that Gold Price may come under further pressure, as it has been unable to move beyond a flat 20 DMA for over a week, meeting sellers around it. The same chart shows that technical indicators are directionless around their midlines, reflecting side-lined speculative interest.

From a fundamental perspective, however, XAUUSD has room to appreciate further and retest bears’ determination at around the $2,000 figure, while a break above the latter could result in a test of record highs in the $2,070 price zone.