Gold Price Forecast XAU/USD – Early Rally Stalls on Nervousness Ahead of Fed Minutes

Gold futures spiked higher early Tuesday on technical buying, but gains were limited by a surge in the U.S. Dollar. The rally into its highest level since June 2022 was helped by a drop in Treasury yields. Nonetheless, the trade was a little cautious as investors assessed the prospects for more Federal Reserve interest rate hikes.

On Tuesday, February Comex gold futures settled at $1846.10, up $19.90 or +1.08%. The SPDR Gold Shares ETF (GLD) finished at $171.04, up $1.40 or +0.82%.

Benchmark U.S. 10-year Treasury yields were near their lowest in a week, reducing the opportunity cost of holding non-yielding gold.

Looking Ahead…

The focus now shifts to Wednesday’s release of the minutes from the Fed’s Dec. 13-14 policy meeting as well as Friday’s U.S. Non-Farm Payrolls report.

Gold futures could spike higher if the Fed minutes reveal that central bank policymakers are considering slowing the pace of rate hikes and ending the hiking cycle at a lower peak rate than currently anticipated.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1856.60 will signal a resumption of the uptrend. The main trend will change to down on a move through $1733.50.

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 resistance is a long-term 50% level at $1861.30. This is followed by a long-term 61.8% level at $1915.30.

On the downside, the minor support is a pivot at $1824.70, followed by a support cluster at $1804.30 – $1795.10.

Daily Swing Chart Technical Forecast

Trader reaction to $1844.00 is likely to determine the early direction of February Comex gold on Wednesday.

Bullish Scenario

A sustained move over $1844.00 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the long-term 50% level at $1861.30. This is a potential trigger point for an acceleration to the upside with the long-term Fibonacci level at $1861.30 the next major target.

Bearish Scenario

A sustained move under $1844.00 will signal the presence of sellers. This could trigger a break into the pivot at $1824.70. Since the main trend is up, look for buyers on the first test of this level. If it fails, the selling pressure could extend into the support zone at $1804.30 – $1795.10.