Gold Price Forecast: XAU/USD hovers near $1,800 as USD remains steady

• Gold prints losses following the previous day’s decline on Friday.
• US Dollar Index bounces back above 92.50 on Fed’s official’s hawkish comments.
• Risk-aversion capped the downside for the precious metal.

After testing the high of $1,794.85  in the overnight session, gold prices edge lower on Friday. The US Treasury yields bounce off their lows following the previous day’s sell-off.

Investors seek some bottom buying in the safe-haven asset amid rising Delta variant cases of coronavirus and the latest Fed’s meeting minutes. 

The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies, remains strong above 92.50 on Fed’s official comments and upbeat economic data, whereas the benchmark 10-year US Treasury bond yields rise 5 basis points to 1.24%. 

The higher US Treasury yields increase the opportunity cost of holding the bullion metal. Minutes from the Fed’s July meeting showed on Wednesday that the US central bank looking at the potential to ease the bond-buying program if the economy continues to show signs of improvement.

The US Initial Jobless Claims fell to a one-and-a-half-year low at 348K in the week ending August 14, below the market expectations of 363K. Gold prices were unable to find traction after following the robust labor market data.

Global stock markets were mostly up on Thursday, which also weighed upon the precious metal. Gold Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), dropped by 2.04 tonnes t0 1,015.10 tonnes.

Meanwhile, the precious metal’s downside is capped as demand emerges near the lower level amid rising concerns on the spread of the Delta variant and its possible effect on global growth recovery.

Technical levels

Gold prices extended the gains from the low of $1,667.78  made on August 9 and touched the high of $1,705.56 in the month of August The August series started on a subdued note while swinging back and forth in the narrow trade range of $1,800 and $1,830.

XAU/USD daily chart

The ascending trendline from the low of the mentioned lower level levels acts as a defensive for the bulls. A break of the bullish slop line would intensify the selling pressure in the gold prices.

The Moving Average Convergence Divergence (MACD) remains neutral in the oversold zone.  A downtick in the MACD indicator would confirm the downside momentum. 

A sustained break below the $1,800 would make the journey toward the south for the prices.

XAU/USD additional levels