Gold Price Forecast: XAU/USD bears eye $1,753 despite softer USD

• Gold remains on the back foot for fourth consecutive day, keeps downside break of 100-DMA previous support from August.
• Market sentiment dwindles amid indecision over the pace of Fed’s March rate hike after Friday’s US Employment Cost Index.
• US Treasury yields fail to recall USD buyers amid a sluggish start to the NFP week.
• Gold Weekly Forecast: XAU/USD poised for further losses on Fed's hawkish stance

Gold (XAU/USD) prices drop for the fourth day in a row, refreshing intraday bottom around $1,786 heading into Monday’s European session.

In doing so, the yellow metal fails to cheer the US dollar pullback as the US Treasury yields stay firmer and stock futures fail to extend Friday’s rebound.

The reason could be linked to the market’s indecision ahead of the March month Federal Reserve (Fed) meeting, as well as this week’s US jobs report. It should be noted that the geopolitical fears surrounding Russia add to the risk-off mood and drown gold prices to justify the technically bearish confirmation.

the US Dollar Index (DXY) tracks downbeat Treasury yields to extend Friday’s pullback from the highest levels since July 2020. Behind the moves could be the market’s indecision over the pace of the Fed’s rate hike in March after the recently downbeat wage price data.

Although the Fed’s hawkish halt drowned gold prices the last week, the US Q4 Employment Cost Index (ECI) raises challenges for the Fed policymakers who expect 0.50% rate hikes. Though, strong readings of the Fed’s preferred gauge of inflation, namely Core PCE Price Index for December rose to 4.9%, versus 4.8% forecast and 4.7% prior, keeping the Fed hawks on the table.

Following the US data release, Federal Reserve Bank of Minneapolis President Neel Kashkari said that he expects Fed to raise rates at the March meeting. Though, the policymaker emphasized the importance of incoming data while also saying, “Have to see how data plays out.”

On the same line was Raphael Bostic, President of the Fed’s Atlanta branch who reiterated his call for three Fed rate lifts in 2022 in an interview with the Financial Times (FT), with the first coming in March. “If the data say that things have evolved in a way that a 50 basis point move is required or [would] be appropriate, then I’m going to lean into that . . . If moving in successive meetings makes sense, I’ll be comfortable with that,” said Fed’s Bostic per FT.

Elsewhere, the US Senate's aggression towards passing a law to levy economic sanctions on Russia also weighs on the risk appetite. “US senators are very close to reaching a deal on legislation to sanction Russia over its actions on Ukraine, including some measures that may take effect before any invasion, two leading senators said on Sunday,” said Reuters.

Moving on, a light calendar on Monday may challenge gold traders but major attention will be given to Friday’s US jobs report, as well as Treasury yields for fresh impulse.

Technical analysis

Gold prices stay below the $1,795-96 resistance confluence, including 100-DMA and an ascending trend line from August, while portraying a four-day downtrend of late.

The metal’s declines also take clues from bearish MACD signals and downbeat RSI, not oversold.

As a result, the 61.8% Fibonacci retracement (Fibo.) of April-June 2021 upside, near $1,770, can act as immediate support to watch for the gold sellers.

Following that, December’s bottom surrounding $1,753 will be crucial as it holds the key to the quote’s further downside towards September’s low of $1,721.

Alternatively, a daily closing beyond $1,796 will need validation from the $1,800 threshold to again aim for the yearly resistance line, around $1,845.

Even if the gold buyers manage to cross the $1,845 resistance, the monthly high near $1,853 will be crucial for the metal’s further upside.

Gold: Daily chart

Trend: Further weakness expected