Gold Price Forecast: Can XAUUSD shrug off the recent lethargy?

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

Gold Price stands at around $1930.00 a troy ounce, still struggling for direction as financial markets try to assess central banks and war-related headlines, although pressuring the upside and nearing the weekly high of $1,941.24. XAUUSD is raising on the back of a souring market’s mood, with Wall Street changing course after Tuesday’s gains. The US dollar is also appreciating in a risk-averse environment, mainly against its European rivals. Commodity-linked currencies, on the other hand, are finding support in soaring oil prices, reaching fresh multi-month highs versus the greenback.

Meanwhile, US indexes remain in the red, maintaining Gold Price afloat. US indexes had briefly extended their slides after the initial slump, now consolidating early losses. The Nasdaq Composite is doing better than its counterparts, down a modest 0.19%. The Dow Jones Industrial Average, on the other hand, remains near its daily lows, currently down 244 points. 

Sentiment-related trading has been the main theme ever since Russia invaded neighbor 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 yield on the 2-year note peaked at 2.198%, but is now hovering around 2.15%. 

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 intend 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 Price attempts to rebound after testing key support

Gold Price 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.