Title: Gold Price Forecast: XAU/USD jumps closer to Friday’s swing high amid notable USD supply

September 12, 2022 04:15 AM ET

By: AnalysisWatch

Gold attracts some bearish buying near the $1,712 area on Monday and turns positive for the second consecutive day. In the European session, Xau/USD refreshes its daily high around $1,726-1,727 on Friday and approaches a week-and-a-half high.

The U.S. dollar extends last week's strong retracement and remains under intense selling pressure on the first day of a new week. In fact, the USD index, which measures the performance of the greenback against a basket of currencies, is plunging to a new monthly low and offering support to dollar-denominated gold.

Given that markets have already priced in a 75 basis point rate hike by the Fed in September, low U.S.

Treasury yields are proving to be a key factor weighing on the greenback. In addition, growing fears of a worsening global economic slowdown are helping to direct flows into the safe haven yellow metal.

That said, a positive attitude toward risk, as portrayed by a generally optimistic mood in the stock markets, could be a drag on the precious metal. In addition, the prospect of more aggressive policy tightening by major central banks should be taken into account before positioning for further appreciation in non-performing gold.

Investors may also prefer to sit on the sidelines ahead of the release of the latest U.S. inflation numbers, due Tuesday. The crucial U.S. The CPI report will influence the Fed's policy outlook and dictate the short-term trajectory of the dollar. This will help investors determine the next step in gold's directional movement.

In the meantime, XAU/USD is more likely to enter a consolidation phase in the absence of market-relevant economic data from the US. That said, U.S. bond yields and dollar price momentum, as well as general risk sentiment, could still provide some impetus for gold and allow traders to seize short-term opportunities.