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Gold Price Forecast XAU/USD – Traders Eyeing Treasury Yields, Greenback for Guidance

By:
James Hyerczyk
Updated: Dec 29, 2022, 10:11 UTC

The 10-year US Treasury yield rose on Wednesday, lifting the dollar, as investors fretted over economic growth and monetary policy direction for 2023.

Comex Gold

In this article:

Gold futures closed lower on Wednesday after a tight trade inside its one-month range. After reaching its highest level since June the previous session, gold retreated as a stronger dollar and higher Treasury yields weighed.

On Wednesday, February Comex gold futures settled at $1815.80, down $7.30 or -0.40%. The SPDR Gold Shares ETF (GLD) finished at $167.91, down $0.76 or -0.45%.

Higher Treasury Yields Underpin Greenback, Pressure Dollar-Denominated Gold

The 10-year U.S. Treasury yield rose on Wednesday, lifting the U.S. Dollar, as investors fretted over economic growth and monetary policy direction for 2023.

The benchmark 10-year Treasury yield was up by more than 1 basis point at 3.875%. The yield on the 2-year Treasury note dipped by 1 basis point and was last trading around 4.353%.

Higher yields tend to weigh on non-yielding gold, while a stronger greenback makes dollar-denominated bullion more expensive for foreign traders.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1841.90 will signal a resumption of the uptrend. A move through $1752.90 will change the main trend to down.

The minor trend is also up. A trade through $1792.70 will change the minor trend to down. This will shift momentum to the downside.

The nearest support is a Fibonacci level at $1804.30, followed by 50% levels at $1787.70 and $1771.50.

The major resistance is a long-term retracement zone at $1861.30 to $1915.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1823.10 is likely to determine the direction of the February Comex gold futures contract early Thursday.

Bearish Scenario

A sustained move under $1823.10 will indicate the presence of sellers. If this creates enough downside momentum then look for a test of $1804.30. If this fails then look for the selling to possibly extend into the minor bottom at $1792.70, followed by the minor pivot at $1787.70.

Bullish Scenario

A sustained move over $1823.10 will signal the presence of buyers. If this generates enough upside momentum then look for a possible surge into the minor top at $1841.90.

Side Notes

Volume is expected to be light so be careful buying strength and selling weakness. Continue to be guided by the price action in Treasurys and the U.S.  Dollar.

For a look at all of today’s economic events, check out our economic calendar.

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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