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

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 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.