Gold Price Forecast XAU/USD – Hovering Near Session Low as Treasury Yields Surge

James Hyerczyk
Updated: Feb 7, 2023, 20:55 UTC

Treasury yields ticked higher even after Powell suggested that the Fed is making headway in its efforts to tamp down inflation.

Comex Gold

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Gold futures are slightly higher late in the session on Tuesday after giving back most of its earlier gains. After treading water shortly after the opening, the market surged to its high of the session as the U.S. Dollar collapsed following dovish comments from U.S. Federal Reserve Chair Jerome Powell.

At 20:25 GMT, April Comex gold futures are trading $1881.90, up $2.40 or +0.13% and the XAU/USD is at $1868.87, up $0.31 or +0.02%. The SPDR Gold Shares ETF (GLD) is at $173.78, down $0.04 or -0.02%.

Gold Rally Falters as Treasury Yields Rise, Offsetting Weaker US Dollar

Although the U.S. Dollar declined as Powell spoke, Treasury yields ticked higher Tuesday even after the central bank chief suggested that the central bank is making headway in its efforts to tamp down inflation. This likely limited gold’s gains.

Powell’s speech actually contained a mixed message. On one hand, he indicated that the disinflationary process was underway. On the other, he suggested that the Fed may still need to hike more aggressively.

“The reality is we’re going to react to the data,” Powell said during an appearance before the Economic Club of Washington. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”

Daily April Comex Gold

Daily April Comex Gold Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1873.20 will signal a resumption of the downtrend. A move through $1975.20 will change the main trend to up.

The main range is $2039.00 to $1647.70. Gold is currently trading inside its retracement zone at $1843.40 to $1889.50. This area is controlling the longer-term direction of the market.

The short-term range is $1749.60 to $1975.20. Its 50% level at $1862.40 is inside the longer-term zone, making it potential support.

On the upside, the closest resistance is a pair of 50% levels at $1909.30 and $1924.20.

Daily April Comex Gold Technical Forecast

Trader reaction to the long-term Fibonacci level at $1889.50 is likely to determine the direction of the April Comex gold futures contract into the close on Tuesday.

Bearish Scenario

A sustained move under $1889.50 will indicate the presence of sellers. The first downside target is the minor bottom at $1873.20, followed by a 50% level at $1862.40. If this fails then look for the selling to possibly extend into the long-term 50% level at $1843.40.

Bullish Scenario

A sustained move over $1889.50 will signal the presence of buyers. This could trigger a late session short-covering rally into a pair of 50% levels at $1909.30 and $1924.20.

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About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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