Gold Price Forecast XAU/USD – Rising Rates, Stronger Dollar Capping Gains Ahead of ADP, JOLTS Data

Gold futures are trading flat on Wednesday after touching a one-week lower earlier in the session. This follows yesterday’s steep decline, touched off by hawkish comments before a congressional committee from Federal Reserve Chairman Jerome Powell.

At 11:21 GMT, April Comex gold is trading at $1820.50, up $0.50 or +0.03%, and XAU/USD is at $1816.24, up $2.205 or +0.12%. On Tuesday, SPDR Gold Shares ETF (GLD) settled at $168.62, down $3.00 or -1.75%.

The Fed will likely need to raise rates more than expected in response to recent solid data and is prepared to move in more significant steps if the “totality” of incoming information suggests stricter measures are needed to control inflation, Powell said.

Powell’s Comments Boost Yields, US Dollar

U.S. Treasury yields climbed on Wednesday as investors digested comments made by Fed Chief Powell. Traders are also looking forward to private sector jobs data.

Based on robust economic data, Powell said interest rate hikes could go higher than expected. Not only did this comment drive yields higher, but also the U.S. Dollar.

Gold’s appeal tends to dim when rate hike expectations rise because higher rates increase the opportunity cost of holding non-yielding bullion. A stronger greenback also weighs on foreign demand for dollar-denominated gold.

Looking Ahead …

Gold investors will get the opportunity on Wednesday to react to fresh labor market data from the ADP National Employment report, due to be released at 13:15 GMT and the Job Openings and Labor Turnover Survey (JOLTS) at 15:00 GMT.

Daily April Comex Gold Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1810.80 will signal a resumption of the downtrend. A move through $1864.40 will change the main trend to up.

The main range is $1647.70 to $1975.20. Its retracement zone at $1811.50 to $1772.80 is potential support.

On the upside, the resistance is a long-term retracement zone at $1843.40 to $1889.50. Inside this zone is a short-term 50% level, also potential resistance.

Daily April Comex Gold Technical Forecast

Trader reaction to the 50% level at $1811.50 will determine the direction of the April Comex gold futures contract on Wednesday.

Bullish Scenario

A sustained move over $1811.50 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $1843.40, followed by a resistance cluster at $1862.40 – $1864.40.

Bearish Scenario

A sustained move under $1811.50 will signal the presence of sellers. Taking out $1810.80 could trigger an acceleration to the downside, which could extend the selling into $1772.80.