Gold Price Forecast: XAU/USD recovers momentum from $1,830 as DXY trims gains

• Gold prices correct to the $1,830 area as Dollar’s strength eases.
• Some bullish moment prevails while above $1,830 and the 20-hour SMA.
• Wall Street is set to open with gains.

Gold prices are having a volatile session on Tuesday after resuming normal trading activity. Earlier XAU/USD peaked at $1,849.99, level last seen back in May and then started to pullback, finding support at $1,830. Before Wall Street’s opening bell it is hovering slightly below $1,840.

The key driver in Gold’s correction was a rally of the US Dollar against G10 currencies. The DXY is off highs, up by 1%. Now it is retreating across the board, favoring the bounce back to the upside in the yellow metal.

Economic data released on Tuesday showed inflation slowed in Germany in December more than expected. German bond yields are falling with the 10-year yield down by almost 3% at 2.36%, far from the 2.57% of last week. US yields are also lower with the 10-year at 3.74%.

The decline in yields and the rebound in risk appetite during the last hours, offered support to Gold prices and a modest boost back to the $1,840 area. S&P futures are up by 0.63%.

If XAU/USD recovers levels above $1,840 another test of $1,850 seems likely as it would reinforce the bullish outlook. On the contrary, a slide below $1,830 could trigger a reversal, leaving XAU/USD vulnerable.

Technical levels