Gold Price Forecast: Gold attracted some buying near the $1,785 region on Monday and ended the day in the green, snapping three consecutivedays of the losing streak to the lowestlevel since December 16. As investors digested a more hawkish tone coming out of the FOMC meeting last week, the US dollar witnessed aggressive longunwinding trade and recorded its biggest drop in nearly three weeks. This, in turn, was seen as a key factor that extended some support to the dollar-denominated commodity.
Given the post-FOMC bullish run to a 19-month high, the USD pullback could be attributed to profit-taking amid the continued flattening of the US Treasury yield curve. Growing acceptance that the Fed will tighten its monetarypolicy at a faster pace than anticipated now seems to have dampened future growth expectations. This played out in the money markets, where the spread between 2 and 10-year US governmentbonds fell below 59 bps for the first time since early November and undermined the buck.
Meanwhile, the markets have fully priced in an eventual Fed liftoff in March and expect five quarter-point rate hikes by the end of 2022. This held back traders from placing bullish aggressivebets around the non-yielding yellow metal. Apart from this, a late rally in the US equity markets capped gains for the safe-haven gold. Investors also preferred to wait on the sidelines ahead of this week’s important US macro data, including the NFP report, scheduled at the beginning of a new month.
Nevertheless, gold finally settled near the top end of its daily trading range and held steady just below the $1,800 mark through the Asian session on Tuesday. Market participants now look forward to the US economicdocket, highlighting the release of the ISM Manufacturing PMI for some impetus later during the early North American session. Traders will further take cues from the US bond yields, which will influence the USD price dynamics and produce some short-term opportunities around the metal.
Gold Technical Outlook – MCX Money
From a technical perspective, the $1,800 mark represents an ascending trend-line support breakpoint and should act as a pivotal point for short-term traders. Some follow-through buying, leading to a subsequentmove back above the very important 200-day SMA, currently around the $1,810 region might provide some bullish impetus. Gold could then aim to surpass an intermediate barrier near the $1,818 area and accelerate the momentum further towards challenging the $1,832-$1,835 static resistance.
On the flip side, the $1,790 area now seems to protect the immediate downside ahead of last week’s swing low, around the $1,780 region. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for a slide towards testing the next relevant support near the $1,768 zone. The downward trajectory could further get extended towards December monthly swing low, around the $1,753 region.