Gold Price Forecast: XAU/USD bulls step back from 200-DMA

Gold Price Forecast: XAU/USD bulls step back from 200-DMA as US Treasury yields rebound

Gold snaps two-day uptrend to consolidate the biggest daily jump in a week.

US Treasury yields recover after declining the most since mid August.

US Inflation data fails to tame the tapering chatters despite easing in August.

Gold Price Forecast: XAU/USD jumps above range on falling yields, eyes $1820

Gold (XAU/USD) fades the strongest run-up in a week above $1,800, down 0.15% intraday around $1,801, during Wednesdays Asian session.

The yellow metal jumped to the weeks high, also broke the monotony surrounding $1,800, after the US Consumer Price Index (CPI) miss clouded Fed tapering concerns the previous day. Even so, a recheck of the details suggests that the inflation figures are high enough to favor Fed hawks when they meet the next week.

The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months. Fed‘s readiness to accept a bit higher inflation figures, terming it ’transitory‘, seems to be at test with almost double YoY figures than the US central bank’s previous target range of near 2.0%.

Following the key data release, the US 10-year Treasury yields dropped the most in a month before recently recovering to 1.29%. It should be noted that the S&P 500 Futures print mild gains by the press time even as the Wall Street benchmarks closed in the red the previous day.

In addition to the re-think over the Fed tapering, covid woes and geopolitical tensions also weigh on the market sentiment, underpinning the safe-haven demand of the US Treasury bonds, which in turn weigh on its yields.

Although the virus numbers from the Asia-Pacific region have eased of late, slower jabbing and doubts over the Delta variant spread challenge the market sentiment. Also weighing on the risk appetite, as well as gold, are hurricanes in the US and political tension in Canada and the Middle East.

Looking forward, gold traders will keep their eyes on the more clues to confirm the next week‘s tapering from the Fed. The same highlights Thursday’s Retail Sales and Fridays Michigan Consumer Confidence. For today, risk catalysts and the US Industrial Production for August, expected to ease from 0.9% to 0.5%, could offer intermediate moves.

Technical analysis

Despite crossing an immediate trading range between $1,782 and $1,804, gold prices failed to provide a daily closing beyond the 200-DMA level near $1,809.

Also challenges the gold buyer is the sluggish MACD and RSI conditions, as well as double tops surrounding $1,834.

Meanwhile, 61.8% Fibonacci retracement of July-August fall, around $1,777, adds to the downside filters, other than the multiple lows marked recently near $1,782.

Its worth observing that five-week-old horizontal support of around $1,758 will challenge gold bears below $1,777.

Overall, gold remains firmer but needs to cross the 200-DMA for giving controls to the bulls.