Gold Price Forecast: $1,960 could cap XAU/USD ahead of US CPI

Gold struggled to capitalize on its early uptick and attracted some selling around the $1,960 region on Tuesday. The pullback extended through the first half of the European session and dragged spot gold further away from the four-week high touched the previous day. The prospects for a faster policy tightening by the Fed pushed the US Treasury bond yields to a fresh multi-year peak and acted as a headwind for the non-yielding yellow metal. That said, concerns that the war in Ukraine and tough new COVID-19 restrictions in China could hit global growth could limit losses for the safe-haven XAU/USD. Apart from this, worries that the recent surge in commodity prices would put upward pressure on already high consumer prices could further benefit the metal's appeal as a hedge against inflation. Hence, the market focus will remain on the US CPI report, scheduled for release later during the early North American session.

Gold: Key levels to watch

The Technical Confluences Detector shows that any subsequent slide is likely to attract some buying near the $1,952-51 region - the Fibonacci 61.8% one day. The next relevant support is pegged near the $1,941 area - the Fibonacci 23.6% one week - ahead of the $1,937 zone, marking the 5-day SMA. A convincing break below could negate prospects for any further near-term appreciating move and drag spot gold to the $1,921-$1,919 intermediate support en-route the $1,900 round-figure mark.

On the flip side, the $1,960 region now seems to have emerged as an immediate strong barrier. The said resistance is the convergence of the Fibonacci 38.2% one day, Pivot Point one week R1, Bollinger Band one-day Upper and the Fibonacci 61.8% one month. Sustained strength beyond would be seen as a fresh trigger for bullish traders and pave the way for a move back towards the $2,000 psychological mark.

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Silver Price Analysis: XAG/USD rallies into the low $25.00s amid safe-haven bid, despite higher yields

Silver has seen a decent push higher on Monday amid geopolitical/China lockdown worries, shrugging off the headwind of higher yields.

XAG/USD has rallied back to near $25.20, up over 40 cents, and is eyeing late March highs at $25.85.

Fed speak and US inflation will be in focus this week and could test bullish conviction.

Risk-off trade in global equities as markets fret about recent news regarding the Russo-Ukraine war and the risk of a further widening of lockdowns in China has offset the negative impact of a continued sharp rise in global yields on precious metals markets. Indeed, though US 10-year yields have rallied a further 3-4bps to a fresh multi-year high above 2.75%, thus increasing the opportunity cost of holding non-yielding assets (like precious metals), spot silver (XAG/USD) trades with impressive on the day gains of more than 1.7%.

XAG/USD has rallied more than 40 cents from opening levels near $24.75 to current levels around $25.20 and, in doing so, broken to the north of its 21-Day Moving Average at $24.92. Technical buying on the break above a downtrend that had been in play since early March certainly seems to have helped. Bulls will now be eyeing a test of late March highs at $25.85 ahead of a potential run towards last month’s highs near $27.00.

But the silver bulls won’t be declaring victory for the week just yet, given a plethora of key upcoming risk events. A barrage of Fed policymakers will be speaking in the coming days (with a total of four appearing on Monday alone) and are likely to reiterate recent hawkish messages. But the main event(s) of the week will be the release of US Consumer and Producer Price Inflation data on Tuesday and Wednesday which, if they surprise to the upside, could exert even more pressure on the Fed to be hawkish.

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