Gold Price Forecast XAU/USD – Under Pressure as Higher Yields, Firm Dollar Weigh on Sentiment

Gold futures are edging lower on Tuesday as Treasury yields and the U.S. Dollar nudged higher, dampening the investment appeal of bullion and encouraging profit-taking. Uncertainty over the direction of the U.S. Federal Reserve’s rate hike path is being blamed for the weakness.

Rising rates tends to reduce the appeal of non-yielding gold, while a stronger dollar makes bullion more expensive for foreign buyers.

Technical factors are also contributing to the weakness with some contrarian analysts reading the charts as overbought.

At 11:44 GMT, February Comex gold is trading $1910.30, down $8.00 or -0.42%. Last Friday, the SPDR Gold Shares ETF settled at $178.73, up $2.09 or -1.18%. It is expected to open slightly lower when the U.S. stock market reopens after Monday’s holiday.

Traders will get the opportunity to react to the Empire State Manufacturing Index at 13:30 GMT. However, most eyes are on the Bank of Japan’s monetary policy statement and interest rate decision, due to be released early Wednesday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside overnight with the confirmation of Monday’s closing price reversal top.

A trade through $1931.80 will negate the chart pattern and signal a resumption of the uptrend. A trade through $1733.50 will change the main trend to down.

The minor trend is also up. A trade through $1829.90 will change the main trend to down. This will confirm the shift in momentum.

On the downside, the nearest targets are a pair of 50% levels at $1880.90 and $1861.30.

Daily Swing Chart Technical Forecast

Trader reaction to a long-term Fibonacci level at $1915.30 will determine the direction of the February Comex gold futures contract on Tuesday.

Bearish Scenario

A sustained move under $1915.30 will signal the presence of counter-trend sellers. If this creates enough downside momentum then look for a sharp break into the first minor pivot at $1880.90.

Bullish Scenario

A sustained move over $1915.30 will indicate the presence of buyers. This could lead to a test of the new minor top at $1931.80, which is also the trigger point for a potential acceleration to the upside.

The daily chart shows the market has plenty of room to the upside with the April 18 main top at $2030.00 the next major target price.