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18.01.2022 09:17

Gold Price Forecast: XAU/USD justifies Monday’s Doji to brace for $1,830, ignores strong yields

  • Gold remains firmer around intraday high after a bullish candlestick formation.
  • US Treasury yields refresh multi-day top as bond/equities’ trading resume following MLK Day off.
  • DXY struggles to extend two-day uptrend amid mixed concerns over Fed’s next moves, Omicron.
  • Gold Price Forecast: Hovering around $1,820 in a quiet start to the week

Gold (XAU/USD) prices stay on the front foot near intraday high of $1,820.31 during Tuesday’s Asian session.

The yellow metal portrayed a sluggish start to the week while marking a Doji candlestick on Monday following the two-day downside. The trend reversal suggests candlestick joins mixed concerns over the Fed’s next move and the South African covid variant, namely Omicron, to underpin the latest upside of the gold prices.

In doing so, the riskier asset ignores firmer US Treasury yields while tracking mildly bid S&P 500 Futures.

That said, the US 10-year and 5-year Treasury yields rose to the highest in two years while 2-year coupon jump to the February 2020 levels during the week-start move. On the other hand, S&P 500 Futures rise 0.12% intraday by the press time.

US Treasury yields seem to react to the latest hawkish comment from Federal Reserve Bank of San Francisco President Mary Daly and New York Fed President John Williams, published on Friday, ahead of next week’s Federal Open Market Committee (FOMC) meeting. In doing so, the bond coupons pay a little heed to the softer prints of the US Retail Sales for December and Michigan Consumer Sentiment Index for January.

It should be noted that Omicron concerns flash mixed signals with rising cases in China and Japan signaling more virus-led activity restrictions while softer numbers in the West placate market players. It should be noted that Tokyo and the other 10 Japanese prefectures are at the risk of witnessing quasi-emergency while China’s Tianjin threatens a stop all foreign mails due to covid.

Elsewhere, North Korea’s missile testing and the Sino-American tussles also challenge the market sentiment but fails of late.

Looking forward, Bank of Japan (BOJ) monetary policy and the UK jobs report will join updates concerning Omicron and the chatters suggesting China’s likely rate cut, not to forget talks of Fed’s next moves, to direct short-term market moves.

Technical analysis

Monday’s Doji candlestick joins firmer RSI and bullish MACD signals to keep gold buyers hopeful during Tuesday’s Asian session.

However, a clear upside break of the 61.8% Fibonacci retracement (Fibo.) of November-December 2021 downside, around $1,830, becomes necessary for the gold buyers to retake control. It’s worth noting that tops marked during July and September, around $1,834, act as a validation point for the commodity’s further rally.

Following that, the run-up could aim for the multiple lows marked during mid-November around $1,850 ahead of the challenging latest 2021 peak surrounding $1,877.

Alternatively, pullback moves may aim for the 50% and 38.2% Fibo. levels, respectively near $1,815 and $1,800 threshold.

Though, a convergence of the 100-DMA and an ascending support line from December 15, around $1,793, becomes a strong support for the gold sellers to watch afterward.

Overall, gold buyers brace for the short-term key hurdle to the north, backed by firmer oscillators and candlestick formation.

Gold: Daily chart

Trend: Further upside expected

 


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