Gold Price Prediction: XAU/USD eases from weekly highs below $1,950 as the dollar strengthens.

  • The gold price has risen as a result of the Fed's aggressive policies.
  • The EU leaders' meeting and Biden's meeting with NATO colleagues will remain in the spotlight.
  • Gold bulls are strengthening above 21 EMA.

Update: During the mid-Asian session on Thursday, gold (XAU/USD) pares its highest daily advances in 12 days, hovering around $1,941.

The yellow metal was boosted by a drop in US Treasury yields from a three-year high the day before, resulting in significant gains. Despite the market's nervousness ahead of significant data/events, bond coupons recover, underpinning the US dollar's strength.

S&P 500 Futures, on the other hand, seesaw between gains and losses, rising 0.11 percent intraday to 4,452 by press time, while US 10-year Treasury yields fell from a three-year high of 2.30 percent to 2.33 percent at the latest.

The US PMIs for March and Durable Goods Orders for February are highlighted in the latest hawkish Fedspeak. President Biden's visit with NATO partners in Europe is also framed by tensions between Ukraine and Russia, as well as the US readiness to slam more sanctions on Moscow.

On a significant day, China's covid report and uncertainties originating from the Middle East may possibly pose a threat to gold prices.

The update is now complete.

Since last week, gold (XAU/USD) has been trading in a narrow range of $1,911.10-1,941.56, but it now appears to be breaking out of the woods and rallying further, despite headwinds from the Federal Reserve's (Fed) policymakers.

Despite increased odds of a 50 basis point (bps) interest rate hike by the Fed, market players appear to be supporting gold. In a speech on Wednesday, San Francisco Fed Bank President Mary Daly predicted that interest rates would settle around 2.5 percent, which would be needed to combat rising inflation, while Cleveland Fed Bank President Loretta Mester predicted that the Fed would raise rates by 50 basis points more than once by the end of 2022. The Fed members' aggressive tightening approach appears to have failed to tighten gold prices.

The US dollar index (DXY) has remained stuck near 98.50, waiting for a new wave of risk aversion to attract bids. Meanwhile, 10-year US Treasury yields have dipped somewhat from their recent two-year high of 2.42 percent.

On Thursday, the economic calendar is jam-packed with mega-events. On Thursday, the US docket will publish Initial Jobless Claims, Durable Goods Orders, and the Markit Manufacturing and Services PMI. The focus will remain on the EU leaders' meeting to address the Russian oil embargo and US President Joe Biden's meeting with his NATO counterparts to discuss Russia-Ukraine tensions and a diplomatic solution.

Technical Analysis of Gold

The XAU/USD pair has broken out of the falling channel, sending gold prices near $1,945. The upper end of the descending channel is defined by the high of March 17 at $1,949.80, and the lower end by the low of March 18 at $1,918.21. The Relative Strength Index (RSI) (14) is swinging between 60.00 and 80.00, indicating that the bullish trend is likely to continue. The counter will be supported by the 21-period Exponential Moving Average (EMA) at $1,937.15.

Hourly gold chart

XAU/USD eases from weekly highs below $1,950 as the dollar strengthens
XAU/USD eases from weekly highs below $1,950 as the dollar strengthens

XAU/USD eases from weekly highs below $1,950 as the dollar strengthens
XAU/USD eases from weekly highs below $1,950 as the dollar strengthens