Gold Price Forecast: XAU/USD moves away from multi-week top, remains depressed below $1,900

• Gold price drifts lower for the second straight day and retreats further from a multi-week high.
• Bets for additional rate hikes by major central banks weigh on the non-yielding yellow metal.
• Rallying US bond yields underpins the US Dollar and further contributes to the selling pressure.

Gold price remains under some selling pressure for the second straight day on Wednesday and extends the overnight pullback from the $1,914-$1,915 area, or its highest level since early February. The intraday downfall remains uninterrupted through the first half of the European session and drags the XAU/USD to a two-day low, around the $1,885 region in the last hour.

Hawkish Federal Reserve expectations exert pressure on Gold price

Despite concerns over a banking crisis in the United States (US), investors seem convinced that the Federal Reserve (Fed) might still go ahead with a smaller 25 basis point (bps) rate hike at its upcoming policy meeting on March 21-22. The bets were lifted by the latest US Consumer Price Index (CPI) report released on Tuesday, which showed that inflation isn't coming down quite as fast as hoped. This, in turn, is seen as a key factor weighing on the non-yielding Gold price.

Rising US bond yields, stronger US Dollar further weigh on Gold price

The prospect for further policy tightening by the Fed is reinforced by the ongoing rally in the US Treasury bond yields, which, in turn, lends support to the US Dollar (USD). This further contributes to driving flows away from the non-yielding Gold price. Apart from this, a generally positive risk tone, amid easing fears about a broader systemic crisis from the sudden collapse of Silicon Valley Bank (SVB), is seen denting demand for the safe-haven precious metal.

Bets for more rate hikes by other major central banks favour bearish traders

The markets, meanwhile, have been pricing in the possibility of additional jumbo interest rate hikes by the European Central Bank (ECB) beyond the March meeting, due on Thursday. Moreover, the Bank of England (BoE) is also anticipated to stick to its rate-hiking cycle next week. This, in turn, suggests that the recent recovery in Gold prices from the vicinity of the 100-day Simple Moving Average (SMA) might have run its course and favours bearish traders.

Traders look to macro data from United States for some impetus

That said, it will still be prudent to wait for some follow-through selling below the $1,880 resistance breakpoint turned support before positioning for any further losses. Traders now look to the US economic docket, featuring the release of the Producer Price Index (PPI), monthly Retail Sales figures and the Empire State Manufacturing Index. This, along with the US bond yields, the USD price dynamics and the broader risk sentiment, should provide a fresh impetus.

Gold price technical outlook

From a technical perspective, the aforementioned resistance-turned-support near the $1,880 level should protect the immediate downside for Gold price. A convincing break below might prompt some technical selling and drag the XAU/USD towards the next relevant support near the $1,856-$1,855 zone. Some follow-through selling will expose the 100-day SMA support, currently around the $1,817 region, which if broken decisively will be seen as a fresh trigger for bearish traders.

On the flip side, the weekly swing high, around the $1,914-$1,915 region, now seems to act as an immediate strong resistance. Bulls might now wait for a sustained move beyond the said barrier before positioning for the resumption of the recent upward trajectory witnessed over the past week or so. The Gold price might then accelerate the momentum towards retesting the ten-month peak, around the $1,959-$1,960 region touched in February. 

Key levels to watch