Gold Price Forecast: XAU/USD pullback targets $1,968 amid US Dollar rebound, sluggish yields

• Gold price retreats from intraday high to consolidate week-start gains.
• Mixed concerns about inflation, Fed challenge XAU/USD buyers amid light calendar.
• Geopolitical fears emanating from China, Russia also prod Gold buyers.
• US Factory Orders may entertain traders, yields eyed ahead of busy calendar.

Gold price (XAU/USD) prints mild losses around $1,980 as it consolidates the week-start losses heading into Tuesday’s European session. In doing so, the precious metal bears the burden of the US Dollar rebound, as well as a downbeat geopolitical headline, amid a sluggish Asian session.

US Dollar Index (DXY) prints mild gains around 102.20 after falling the most since March 22 on Monday. The DXY’s latest rebound could be linked to the corrective bounce in the US Treasury bond yield. That said, the US 10-year and two-year Treasury bond yields lick their wounds around 3.42% and 3.98% after printing a four-day and two-day downtrend in that order.

While tracing the recovery in yields, the market’s cautious mood amid a light calendar and anxiety ahead of the top-tier US jobs report joins the geopolitical risks emanating from China and Russia to underpin the US Dollar’s haven demand.

Late on Monday, Russian Foreign Minister Sergei Lavrov raised fears of escalating Moscow-Brussels tussle by saying, “The European Union (EU) has "lost" Russia.” The policymaker also added that Moscow will deal with Europe in a tough fashion if need be. Furthermore, the US-China tension is also on the table as Beijing keeps reiterating its dislike for the US-Taiwan ties but Washington seems to ignore it.

Additionally challenging the risk profile are the mixed concerns about the OPEC+ move’s impact on inflation and the Federal Reserve’s (Fed) next action as hawkish bets recede. Late on Monday, US President Joe Biden shrugged off the OPEC+ move and said that it is not as bad as you think. However, US Federal Reserve Board Governor Lisa Cook, as well as US Treasury Secretary Janet Yellen flagged fears of higher inflation and challenges to global growth. While portraying the market’s bets on the Fed, the CME’s FedWatch Tool marks nearly 42% market bets on the Fed’s 0.25% rate hike in May, versus 52% flashed on Friday.

Against this backdrop, S&P 500 Futures pause a four-day uptrend near the highest levels since February 16 while the yields lick their wounds.

Moving on, US Factory Orders for February, expected -0.5% versus -1.6% prior, may entertain Gold traders but major attention should be given to the risk catalysts for clear directions.

Gold price technical analysis

Gold price retreated from a two-week-old descending resistance line, around $1,990 by the press time, amid a looming bear cross on the MACD and downward-sloping RSI (14) line.

As a result, the XAU/USD sellers are likely to extend the latest fall towards the 10-Exponential Moving Average (EMA) level surrounding $1,968.

However, the Gold price weakness below $1,968 could quickly recall $1,930 and the $1,900 threshold, a break of which highlights 200-EMA support of $1,830.

Meanwhile, recovery moves need to cross the fortnight-long resistance surrounding $1,990 to convince the Gold buyers.

Even so, the $2,000 psychological magnet and an upward-sloping resistance line from mid-January, close to $2,027, may act as the last defense of the Gold bears.

Overall, Gold price is likely to remain firmer but a short-term pullback can’t be ruled out.

Gold price: Daily chart

Trend: Limited downside expected