Gold Price Forecast: XAU/USD teases bears near $1,780 amid steady Treasury yields

Gold rebounds from intraday low, prints two-day downtrend.
Firmer US dollar weighs on the commodities during quiet session.
Covid, Sino-American headlines join mixed Fedspeak to back the bears.
Chart of the Week: Gold meets critical landmark

Gold (XAU/USD) regains $1,778 during the bounce off an intraday low as European traders prepare for Tuesday’s bell. Even so, the US dollar strength and challenges to the risk appetite keep gold sellers hopeful amid downbeat technical formation.

US dollar index (DXY) drops back to 91.90 while trimming the two-day gains. Although the pre-EU open consolidation seems to weigh on the dollar gauge, firmer US Treasury yields favor greenback bulls.

Mixed comments from the US Federal Reserve (Fed) policymakers and downbeat Dallas Fed Manufacturing Index figures dragged the US bond yields the previous day. However, fresh optimism over US President Joe Biden’s stimulus package and comparatively upbeat coronavirus (COVID-19) conditions in the US, versus that of Asia-Pacific and the UK, backs the Treasury yields after the heaviest drop in a week.

Wellington is up for lowering the covid alert after witnessing a sustained absence of the new virus cases but pandemic conditions seem to worsen in Australia. On the same line, the UK registered the highest infections since January 30 on Monday.

Fedspeak has recently been modest, as well as defensive, but Friday’s Core PCE Inflation renewed fears that the US central bank needs normalization of easy money policies. Considering that, Thomas Barkin, President of the Richmond Federal Reserve Bank, said on Monday, ”The Fed has had substantial further progress against the inflation goal”.

Elsewhere, US Secretary of State Antony Blinken’s comments over China also weighed on the market sentiment and put a safe-haven bid under the US dollar, indirectly challenging the gold prices. Blinken’s latest comments were, “China is ‘complicated’ when it comes to relations. Not asking anyone to choose between China and us.”

Against this backdrop, S&P 500 Futures remain pressured and so do Asia-Pacific shares. However, traders await fresh clues from US CB Consumer Confidence Index for June and additional comments from the Fed policymakers, not to forget Wednesday’s China official PMI, for fresh impulse.

Although the firming of the US data can exert downside pressure on gold, bears may remain cautious ahead of Friday’s US Nonfarm Payrolls (NFP).

Technical analysis

Gold fades the breakout of the two-week-old falling trend line, portrayed the previous day, amid downbeat MACD signals. Also challenging the gold sellers is the 50-SMA and a descending resistance line from June 18.

That said, the latest bounce could be ignored until staying below the $1,782 resistance line while odds of its battle to a 50-SMA level of $1,780 can’t be ruled out.

It should, however, be noted that a clear break of $1,782 will aim for the $1,800 threshold whereas any further upside will be tamed by the prior support line from June 04, surrounding $1,827.

On the contrary, the immediate resistance-turned-support line near $1,769 holds the key to gold’s fresh downside targeting the monthly low near $1,761.

During the quote’s further weakness past $1,761, March’s top close to $1,755 may test the gold bears before directing them to the mid-April lows near $1,723.