Gold Price Forecast: XAUUSD surrenders modest recovery gains, flirts with one-week low

• Gold struggled to capitalize on its attempted intraday bounce from over a one-week low.
• The risk-on impulse, rising US bond yields, hawkish Fed expectations acted as a headwind.
• Modest USD weakness could lend support to the metal and help limit any further losses.

Gold staged modest recovery from the $1,821 area, or over a one-week low touched this Friday, albeit struggled to capitalize on the move. The XAUUSD has now surrendered a major part of its intraday gains and was seen hovering near the lower end of the daily range during the early North American session.

A significant decline in commodity prices this week seems to have eased fears about the persistent rise in inflationary pressures and boosted investors' sentiment. This, in turn, triggered a strong rally in the equity markets, which was seen as a key factor that capped the upside for the safe-haven gold.

The risk-on impulse allowed the US Treasury bond yields to rebound from a nearly two-week low touched on Thursday. This, along with expectations that the Fed would retain its policy tightening path to curb soaring inflation, contribute to keeping a lid on any meaningful gains for the non-yielding gold.

Even from a technical perspective, repeated failures near the very important 200-day SMA favours the XAUUSD bears and supports prospects for further losses. That said, modest US dollar weakness could lend some support to the dollar-denominated commodity and hold back traders from placing bearish bets.

Market participants now look forward to the US economic docket, featuring the release of the revised Michigan Consumer Sentiment Index and New Home Sales data. This, along with the US bond yields, the USD price dynamics and the broader risk sentiment might provide a fresh trading impetus to gold prices.

Technical levels to watch