Gold Price Forecast: XAU/USD advances on its path toward $1830 on soft US Dollar

• Last Friday’s report of a high Core PCE, the Fed’s gauge for inflation, augmented speculations of rates “higher for longer.”
• US housing data in the United States was mixed, though the markets mainly ignored it.
• XAU/USD Price Forecast: Albeit jumping at the 200-DMA, downside risks remain below $1850.

Gold price is recovering after hitting a new YTD low of $1804.78, rising above the 100-day Exponential Moving Average (EMA). Factors like a mixed sentiment and a soft US Dollar (USD) are tailwinds for the yellow metal, even though there are growing speculations for higher rates in the United States (US). Hence, the XAU/USD is trading at $1827.03, above its opening price by 0.56%.

The jump in Gold prices is courtesy of an offered US Dollar

The financial markets narrative has not changed. Last Friday’s US Core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation edging higher above expectations and closing to the 5% mark, caused a repricing for the Federal Funds Rate (FFR) terminal rate. Money market futures estimates 25 bps rate increases in March, May, and June, which would drag the FFR to the 5.25% - 5.50% range. Nevertheless, some investors are betting the Fed will ease in Q4 2023.

In the meantime, the US economic docket features housing data. According to the US Federal Housing Finance Agency’s data released on Tuesday, house prices in the US decreased by 0.1% from November to December. The S&P/Case-Shiller Home Price Index for December was also released and showed a year-over-year increase of 4.6%, lower than the previous month’s 6.8% and lower than the 6.1% estimated by analysts.

The US Dollar Index (DXY), a measure of the buck’s value against a basket of peers, has been volatile during Tuesday’s session, at around 104.630. Meanwhile, UST yields, mainly the 10-year benchmark note rate, sit at 3.936% and gains two bps, capping XAU/USD rally towards the $1830 area.

XAU/USD Price Analysis: Technical outlook

Technically speaking, the XAU/USD’s recovery above the 100-day EMA keeps Gold bulls hopeful of reclaiming the $1850 area and cemented the case for a bottom around $1800. Nevertheless, the 20-day EMA is about to cross below the 50-day EMA in the $1847 area, which would be of greater importance for sellers, leaning to the $1850 region as they try to re-test the $1800 figure.

XAU/USD needs to get above the intersection of the 20/50-day EMAs for a bullish continuation. Once done, that could pave the way towards the February  9 high at $1890.21, ahead of $1900. For a bearish scenario, the XAU/USD needs to drop below the 100-day EMA at 1820.31, exacerbating a re-test of the 200-day EMA at $1803.57.

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