Gold Price Forecast: XAU/USD eyes a sustained move above $1,800 amid bullish technical setup

  • Gold price looks to build on Friday’s upswing amid a weaker United States Dollar.
  • Higher US Treasury bond yields, amid a hawkish Fed outlook, could cap the gains in Gold price.
  • Gold price yields a weekly close above the 200-Daily Moving Average amid an impending Bull Cross.

Gold price is looking to extend Friday’s rebound above the $1,800 mark as bulls retain control at the start of a new week. The market sentiment remains mixed as investors try to look past the hawkish central banks’ policy outlooks amid renewed Covid fears from China. According to the latest story by the Financial Times (FT), the surge in coronavirus cases in China is “causing widespread business disruption as staffing shortages to threaten to close down factory production lines and truck drivers fall ill, bringing chaos to supply chains.”

Despite a cautious risk tone, the safe-haven US Dollar fails to benefit, as it bears the brunt of the latest sell-off in the USD/JPY pair. The Japanese yen caught a fresh bid wave. It smashed USD/JPY by nearly 0.50%, following the news that the government is set to revise a joint statement with the BoJ over the latter’s inflation target, potentially implying a tweak to its ultra-loose monetary policy. Amidst broad-based US Dollar weakness and a damp mood, Gold price is eyeing a test of the $1,800 mark once again.

However, the rally in the US Treasury bond yields could temper the upside in the non-yielding Gold price. The US Treasury bond yields are cheering the hawkish remarks from the Cleveland Federal Reserve Bank President Loretta Mester. In a Bloomberg TV interview on Sunday, Mester said that she sees rates rising more than most policymakers have forecast.

Looking ahead, Gold price will continue to track the US Dollar price action and risk trends for fresh trading impetus, as the economic calendar remains relatively light heading into a new week. Commentaries from Fed policymakers will also hold the key in gauging the US central bank’s policy outlook for 2023.

Gold price technical analysis: Daily chart

Gold price is seeing a fresh ray of light, as it closed the previous week above the critical 200-Daily Moving Average (DMA) at $1,786.

That said, buyers could extend their control amid a bullish 14-day Relative Strength Index (RSI). The RSI is inching higher above the midline, currently standing at 57.98.

Meanwhile, the upward-sloping 50DMA has pierced the flattish 100DMA from below, but traders await the confirmation of a Bull Cross on a daily closing basis.

The immediate upside hurdle is placed at the $1,800 level, above which the December 15 high at $1,809 will be tested again.

Acceptance above the latter could trigger a fresh upswing toward the multi-month high of $1,824.

On the flip side, the 200DMA resistance-turned-support could restrict any pullbacks. A daily closing below the 200DMA could challenge bullish commitments at the ascending 21DMA at $1,775. A decisive close below the 21DMA support will negate the ongoing upside momentum.

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