Gold Price Forecast: XAU/USD Rises Amid Sluggish Market

The forecast for the price of XAU/USD gold is rumored to rise higher around the intraday peak. This, of course, reversed the decline in prices on the earlier day due to US dollar bulls amid the US holiday on Monday. Thus, the precious metal gold stopped a three-week downward trend amid a dormant market heading into the European session. DXY retreated from its daily highs, but still remained in a very thin bid close to 104.00 after successfully rising for three weeks. The DXY against six major currencies previously supported upbeat US Treasury yields and US data, but mixed comments from Fed officials appeared to weigh on gold prices on Friday. 

Recently, Japanese Prime Minister Fumio Kishida pushed for an immediate meeting with the UN Security Council amid a high level of concern from North Korea after the country fired two of its ballistic missiles at Tokyo, both of which landed outside Japan's EEZ. Correspondingly, the failure of the meeting between US Secretary of State Antony Blinken and Chinese diplomat Wang Yi seems to have restored relations between China and the US. The reason can be attributed to a Chinese diplomat's comment that the US must change course and repair the damage to China-US relations.

It is worth noting that the delay of the PBOC joining the holiday in the US and Canada has limited the movement of gold (XAU/USD). In the midst of this game, the S&P 500 posted a slight decline even as Wall Street closed with mixed data. The 10-year Treasury yield surged up to its highest level since early November last week and has contributed to the DXY's gains, printing a three-week uptrend. A thin calendar and the absence of key players could limit the momentum of XAU/USD. Even so, headlines around China, Russia and North Korea are crucial to the daily direction. After that, Wednesday's FOMC meeting will be very important to watch as well. 

Gold Price Forecast & Technical Analysis

We quote the information and results of this analysis based on the fxstreet.com page where the gold price slipped near the upper line of the bullish chart formation, following a successful bounce from the two-month horizontal support area.

The corrective bounce also took cues from bullish MACD signals and the RSI 14 strengthening, rather than overbought. As a result, confirmation of the bullish pattern with an upside breakout reaching $1,845 seems likely. After that, the 200 SMA level is around $1,892 and the $1,900 threshold could challenge the upside of XAU/USD gold. Alternatively, the horizon line support area as mentioned above near $1,823-22 precedes the lower line of the falling wedge stated near $1,819 to limit the short-term decline of the XAU/USD price. If gold prices are still weak past $1,819, then the possibility of witnessing a decline towards $1,819 cannot be ruled out.