US dollar weakness, softer yields can favor gold buyers amid pre-Fed anxiety.
Gold Price Forecast: XAU/USD likely to consolidate heading into next weeks FOMC meeting
Gold (XAU/USD) prices reverse the previous days pullback from the highest levels since late November during early Friday.
In doing so, the yellow metal cheers consecutive third day of the downbeat US Treasury yields, as well as risk-off mood amid the market‘s cautious sentiment ahead of next week’s Federal Open Market Committee (FOMC). The metal cheered the market‘s optimism amid mixed US data and China’s rate cut the previous day, not to forget receding fears of the South African covid variant, namely Omicron.
While comments from US Treasury Secretary Janet Yellen triggered the latest risk-off mood, by fueling hawkish Fed concerns, a lack of major data/events may restrict the gold prices during the day. However, fears of the US Fed policymakers faster rate hike signals may challenge the precious metal buyers if the US dollar keeps the latest rebound.
Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar
Gold Price: Key levels to watch
The Technical Confluences Detector shows that the gold price is battling the key hurdle around $1,842 comprising a cluster of SMA10 four-hour, Fibonacci 38.2% one-day and Bollinger Band Upper on the daily formation.
Its worth noting that the ability to reverse the previous pullback from a multi-day high, as well as staying above key levels, keeps gold buyers hopeful.
Should the bulls get a bit more support from softer USD and yields, they can easily cross the $1,842 hurdle, which in turn will allow them to aim for the $1,856 hurdle comprising Fibonacci 161.8% on one-day and Pivot Point R1 on one month.
During the rise, Pivot Point R2 on weekly may offer an intermediate halt of around $1,852.
Alternatively, if the downside pressure again intensifies, then bears could challenge critical support at $1,831, encompassing the previous months high.
Given the gold seller‘s ability to conquer the $1,831 support, a downward trajectory towards the $1,821 mark, which is the intersection of the SMA10 one-day and Fibonacci 23.6% one-week, can’t be ruled out.
