Gold Price Forecast: XAU/USD clears daily gains as USD bulls fight back

XAU/USD peaked at a daily high of $1,945 and then settled at $1,935.
The USD recovered ground thanks to rising US Treasury yields.
Investors continue to discount higher odds of the Fed not hiking for the rest of 2023.

At the start of the week, Gold prices slightly decreased as the recovery of the USD limits the upside potential. Markets are cautious ahead of critical inflation data on Thursday and continue to digest Nonfarm Payrolls (NFP) figures from Friday.

After NFPs revealed that job creation cooled down in July in the US, the USD faced severe selling pressure, and the DXY fell below 102.00. On Monday, the index recovered towards 102.10, as the Greenback traded strong against most of its rivals. Attention now turns to Thursday, when the US will report July’s inflation figures, where the Headline Consumer Price Index (CPI) index is expected to accelerate to 3.3% YoY and the Core CPI is seen falling to 4.7% in the same month.

As for now, the CME FedWatch tool suggests that investors discount higher odds of the Federal Reserve (Fed) not hiking in the rest of 2023. Still, inflation data this week will likely impact those bets.

Meanwhile, the US bond yields, which could be seen as the opportunity cost of holding the non-yielding yellow metal, are edging higher. The 10-year bond yield led the way and increased more than 1% in the session to the 4.08% level.

XAU/USD Levels to watch

The technical analysis of the daily chart points to a neutral to a bearish outlook for XAU/USD, indicating the potential for further bearish movement. The Relative Strength Index (RSI) exhibits a negative slope below the 50 threshold, while the Moving Average Convergence (MACD) histogram lays out rising red bars. Plus, the metal is below the 20 and 100-day Simple Moving Averages (SMAs) but above the 200-day SMA, indicating that the bulls aren’t done yet and that the outlook is still positive for the short term.

Support levels: $1,930,$1,915, $1,900.

Resistance levels: $1,955 (20-day SMA), $1,970 (100-day SMA), $1,990.