Gold Price Forecast: XAU/USD remains stuck within sideways channel

• Gold is higher on the day despite a rebounding DXY.
• The US dollar is attempting to rebound from heavy selling overnight. 

The gold price has been trading between support and resistance on the daily chart. At $1,837.90, XAU/USD is trading 0.24% lower having fallen from a high of $1,844.69 to a low of $1,837.73. The yellow metal is trading near a one-week high made in the prior session.

The gold price is now headed for its first weekly gain since mid-April. The DXY index, an index that measures the US dollar vs. a basket of currencies has been under pressure for the most part of the week, enabling the yellow metal to find some relief. The yellow is now higher by some 1.7% into the final trading sessions for the week. 

As for the US 10-year Treasury yield, these have also suffered a sell-off which makes gold more attractive as a place to park idle capital in the face of broader risk aversion themes. 

At 103.07, the DXY index is higher by 0.20% rising from a low of 102.865 to a high of 103.086 in the session so far. Nevertheless, the greenback has fared poorly against riskier currencies this week, falling to its lowest since May 5.

The index hit a near two-decade high last week as a hawkish Federal Reserve and growing worries about the state of the global economy helped lift the greenback to score some 7.5% higher for the year so far. However, there have been question marks over whether the US economy can weather the storm of higher inflation and rapid-fire from the Fed, ultimately weighing on the greenback and giving the yellow metal the edge into the remaining days of the week.

Gold technical analysis

Gold is trapped between daily support and resistance. Additionally, the W-formation is a reversion pattern that could leave the price trapped in the sideways channel for the days ahead. If, however, there is a break one way or the other, of the current support and resistance, then the price imbalances to $1,883 on the upside and $1,780 to the downside could be mitigated.