Gold Price Forecast: XAU/USD bears eye $1,790 as yields cheer Fed Chair nomination

• Gold licks its wounds after declining the most since September 16.
• Markets welcome US Pres. Biden’s decision to nominate Powell for Fed Chair, Clarida as vice Chairman.
• DXY refreshes 16-month high as Yields add over and above last week’s losses, preliminary PMIs for November eyed.
• Gold Price Forecast: Poised to challenge a critical support at 1,803.70

Gold (XAU/USD) defends the $1,800 threshold following the heaviest daily fall in over 10 weeks. That said, the yellow metal picks up bids to $1,809 during the early Asian session on Tuesday.

US President Joe Biden’s decision to nominate Jerome Powell for another term as the Federal Reserve (Fed) Chair and Richard Clarida for Vice-Chairman buoyed market sentiment the previous day. The traders’ zeal propelled US Treasury yields amid hopes of faster tapering and a rate hike during 2022, which in turn fuelled the US Dollar Index (DXY) to a new multi-day high and weighed down the gold prices.

Also exerting downside pressure on the gold were the firmer US data relating to manufacturing and housing, published on Monday. The US The Chicago Fed National Activity Index rose to 0.76 in October versus -0.18% (revised down figure). Further, US Existing Home Sales increased beyond 6.2M forecast and 6.29M previous readouts to 6.3M during the last month.

It’s worth noting that US Treasury Secretary Janet Yellen ruled out inflation fears like the 1970s and allowed the gold traders to lick their wounds near $1,800.

Even so, fears of inflation remain on the table as multi-billion dollars worth of the US stimulus is on the way. Additionally, fresh fears of the covid in the Eurozone threaten the lingering global supply chain and hint at the further worsening of the inflation pressure, as well as the market’s rush towards the US dollar due to its safe-haven nature.

For today, preliminary readings of the November month PMIs for the UK, Eurozone and the US will be important to watch for fresh impulse.

Technical analysis

Not only a U-turn from the yearly resistance line but a clear downside break of the four-month-old horizontal support, now resistance, also keeps the gold sellers hopeful to visit the convergence of the 100 and 200-DMA.

Also supporting the gold sellers are the bearish MACD signals and the descending RSI line, not oversold.

It should be noted, however, that gold’s weakness past the DMA convergence, around $1,794-92, will be challenged by the 38.2% Fibonacci retracement (Fibo.) of January-March declines near $1,784. In a case where gold bears keep dominating past $1,784, an ascending support line from August, at $1,755 by the press time, will be in focus.

Meanwhile, 50% Fibo. level of $1,819 may challenge gold’s corrective pullback, if any, before the stated support-turned-resistance near $1,834.

Even if the bullion prices rise past $1,834, the 61.8% Fibonacci retracement level close to $1,851 and the yearly resistance line around $1,868 will test the gold buyers.

Gold: Daily chart

Trend: Further weakness expected