Gold Price Forecast: XAUUSD tests 21-DMA support amid surging yields, Fed’s Beige Book eyed

• Gold Price remains vulnerable at the critical daily support amid mixed mood.
• Surging Treasury yields offset a broad USD retreat, keeping XAUUSD undermined.
• Focus on Wednesday’s close, with eyes on the Fed’s Beige Book.

Gold Price is making a minor recovery attempt after hitting fresh six-day lows at $1,943, as a broad-based US dollar retreat comes to the rescue of bulls.

The greenback eases from two-year highs vs. its main competitors, tracking the sharp pullback in the USD/JPY pair. The yen is recovering ground following the Bank of Japan’s (BOJ) first bond market intervention of this month.

Despite the pullback in the dollar, the bullish potential remains intact amid the ongoing upsurge in the US Treasury yields. Expectations of faster Fed rate hikes in the coming month, on the back of the recent hawkish Fed commentary, are exacerbating the pain in the bond market. The US 10-year benchmark yields close in on the key 3% level while the real 10-year rates turn positive for the first time since 2020. 

The rise in real returns is likely to undermine the sentiment around the non-interest-bearing Gold Price unless the correction in the USD/JPY pair deepens and knocks the buck sharply down alongside. Further, uncertainty around the Russia-Ukraine war could help the downside in XAUUSD.

Although if risk sentiment worsens, the dollar could see a resurgent demand as a safe haven, which could limit any recovery attempts in Gold Price.

Also read: Gold Price Forecast: Demand for safety paused, but is far from over

On the data front, there is nothing significant on the table and, therefore, all eyes will remain on the Fed’s Beige Book. Meanwhile, investors digest the hawkish comments from Fed officials James Bullard and Charles Evans, who continue to see the need for 50-bps rate increases to curb raging inflation.

Gold Price Chart: Daily chart

Gold’s daily chart shows that the price is looking to defend the critical 21-Dailoy Moving Average (DMA) at $1,944, for now.

This could be seen as the 14-day Relative Strength Index (RSI) is still sitting just above the midline, keeping buyers hopeful.

If Gold Price yields a daily closing below the 21-DMA support, then a fresh downswing towards the April lows of $1,915 cannot be ruled out.

Ahead of that, the ascending 50-DMA at $1,931 will challenge the bullish commitments.

On the upside, the road to recovery in XAUUSD could face initial resistance at the $1,950 psychological barrier.

Up next, Friday’s low of $1,961 could come into play, above which doors will reopen towards the $2,000 mark.