Gold Price Forecast: XAU/USD bulls struggle to find acceptance above descending trend-line

• Gold struggled to preserve its modest intraday gains amid some USD buying interest.
• Retreating US bond yields might help limit losses amid the prevalent cautious mood.
• Hawkish central bank outlooks should continue to keep a lid on any meaningful gains.
• Gold Price Forecast: Falling yields could fuel a sustained break above $1,878 in XAU/USD

Gold edged higher during the early part of the trading action on Thursday, albeit struggled to capitalise on the move beyond the $1,870 level. The XAU/USD pair was last seen trading with modest intraday losses, around the $1,865-64 region heading into the European session.

Following an early dip, the US dollar attracted some buying and stalled the previous day's retracement slide from a 16-month peak. This, in turn, was seen as a key factor that undermined demand for dollar-denominated gold. That said, retreating US Treasury bond yields held back the USD bulls from placing aggressive bets.

Apart from this, a softer risk tone – as depicted by the prevalent cautious mood around the equity markets – could lend some support to the safe-haven gold. Moreover, persistent concerns about rising consumer prices might continue to benefit the precious metal's appeal as a hedge against inflation and limit any meaningful slide.

Meanwhile, the upside seems limited amid expectations that stubbornly high inflation would force major central banks to tighten their monetary policies. The markets have been betting on yet another rate hike by the Reserve Bank of New Zealand later this month, while the Bank of England is anticipated to raise interest rates in December.

Separately, the Fed funds futures indicate the possibility for an eventual Fed rate hike move by July 2022 and a high likelihood of another raise by November. This, in turn, should act as a headwind for the non-yielding gold. The mixed fundamental backdrop suggests that the commodity is more likely to consolidate its recent gains to multi-month highs.

Gold daily chart

Technical outlook

From a technical perspective, gold, so far, hasn't been able to find acceptance above a resistance marked by a downward sloping trend-line extending from August 2020. A sustained break through the mentioned barrier, leading to a subsequent move beyond the weekly swing highs, around the $1,877 level, will be seen as a fresh trigger for bulls. The XAU/SUD might then accelerate the positive move and aim to reclaim the $1,900 mark for the first time since June. The momentum could further get extended towards the next relevant hurdle near the $1,910-12 supply zone.

On the flip side, any meaningful pullback might continue to find decent support near the $1,850-48 region. Some follow-through selling has the potential to drag gold prices back towards the $1,834-32 strong resistance breakpoint, now turned support, which should now act as a strong base for the XAU/USD. A convincing break below the said support is needed to confirm that the recent appreciating move has run out of steam.

Levels to watch