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Title: Gold Price Forecast: XAU/USD renews monthly low near $1,620 as yields propel DXY

Oct 21, 2022 03:01 AM ET


The gold price (XAU/USD) took bids to renew an intraday low near $1,620 in the early hours of Friday's European session. In doing so, the bullion price remains within a bearish chart formation as it approaches the yearly low marked in September.

However, elevated multi-year Treasury yields appear to be the most recent challenge to metal prices. It is worth noting that 10-year US Treasury yields refreshed a 14-year high of 4.27a few minutes ago, while the two-year counterpart rose to the highest levels since 2007 at around 4.64%. Both key bond coupons were near 4.25% and 4.60% at press time.

The rise in the latest Fed bets, comments suggesting further rate hikes by US Federal Reserve officials and mostly upbeat US data appear to have underpinned the fall in bonds of late. The political crisis in Britain, emerging problems in the Chinese economy and the Russia-Ukraine conflict have also weighed on market sentiment and the XAU/USD price.

In the face of rising yields, the US dollar index (DXY) trimmed its first weekly loss in three weeks to around 113.15 in afternoon trading, while Asia-Pacific and European equity and stock futures posted small losses.

However, further weakness in the metal appears to have a bumpy ride as the lower line of the established channel meets the yearly bottom, as well as the near oversold RSI, to challenge the bears.

That said, the $1,600 threshold adds to bearish filters beyond the convergence of immediate support at $1,615.

On the other hand, the 100-HMA guards the near-term XAU/USD upside near $1,643 before challenging the bearish channel by puncturing the pattern's resistance line near $1,645.

Even if the price breaks above $1,645, bullion buyers will remain off the table unless the price renews the monthly high, currently around $1,730.

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