Gold Price Forecast: XAU/USD turns sideways around $1,650, eyes yields action for further guidance

• Gold price is juggling in a limited territory amid lackluster DXY.
• The precious metal has underperformed against risk-perceived currencies amid firmer yields.
• Solid bets for a hawkish Fed policy have kept the 10-year US yields above 4%.

Gold price (XAU/USD) is displaying back-and-forth moves after defending the downside bias below the critical support of $1,650.00. The precious metal is oscillating in a narrow range of $1,645.91-1,657.33 range in early Tokyo. Firmer risk-on sentiment in the market has failed to underpin the yellow metal.

S&P500 has delivered back-to-back bullish trading sessions as the quarterly earnings season has kicked off. Apart from that, risk-perceived currencies have also capitalized on every pullback. The US dollar index (DXY) has logged losses and is hovering around 112.00. The mighty DXY is expected to surrender the 112.00 support further.

The catalyst which is restricting a reversal in the gold prices is the firmer yields that have not surrendered their elevated levels. The 10-year US Treasury yields are holding above the critical hurdle of 4% as the odds for a 75 basis point (bps) rate hike by the Federal Reserve (Fed) are extremely solid. As per the CME FedWatch tool, chances of an increment in the interest rates by 75 bps consecutively for the fourth time stand at around 95%.

Gold technical analysis

Gold prices are auctioning in a symmetrical triangle on an hourly scale as volatility has contracted amid the absence of a trigger in the economic calendar. The downward-sloping trendline is placed from Thursday’s high at $1,682.53 while the upward-sloping trendline is plotted from Friday’s low at $1,640.23.

The precious metal is overlapping with the 20-period Exponential Moving Average (EMA) at $1,652.30, which indicates a consolidation ahead.

Also, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates the unavailability of a potential trigger.

Gold hourly chart