Gold Price Forecast: XAUUSD aims $2,000 amid a solid rebound to near $1,960, yields surge

Gold Price may face various headwinds as the expectations of the Fed's tightening bets elevated.

The 10-year US Treasury yield trims Wednesday’s losses and approaches the 2.80% threshold.

Gold Price could be on the way to a test of the 38.2% and 61.8% ratios near $1,950 and $1,930.

Gold (XAU/USD) witnessed a strong rebound in the late New York session from around $1,961.00 following a minor correction in the US dollar Index (DXY). Investors preferred the precious metal for parking their funds amid a long weekend due to the Easter holiday. It says that the Tough gets going but the journey of recapturing the crucial figure of $2,000 will be filled with difficulties.

The US Treasury yields have recovered from their losses recorded in the last two trading sessions on the optimism of an aggressive tight policy by the Federal Reserve (Fed) in May. The 10-year US Treasury yields have reclaimed their three-year high at 2.83% after the Bank of Canada (BOC) and Reserve Bank of New Zealand (RBNZ) hiked their critical policy rates by 50 basis points (bps). Elevation in policy rates by worldwide central banks raised hopes of mean reversion to neutral rates sooner rather than later. It is worth saying that the campaigning for higher interest rates will also be followed by the Fed in its May monetary policy, and in anticipation of that yields may remain underpinned while the gold prices will face headwinds.

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EUR/USD Price Analysis: Extra pullbacks seen below 1.080

EUR/USD fades the pre-ECB uptick to the 1.0920 zone on Thursday.

Recent lows around 1.0800 emerge as the next contention area.

In light of the ongoing price action, extra losses in the pair remain in the pipeline in the short-term horizon. Against that, a break below the so far monthly low at 1.0808 (April 14 should pave the way for a quick visit to the 2022 low at 1.0805 (March 7) before the May 2020 low at 1.0766 (May 7).

While below the 200-day SMA, today at 1.1440, the outlook for the pair is expected to remain negative. 

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GBP/JPY sticks to strong gains near two-and-half-week high, around 164.00 mark

GBP/JPY regained traction on Wednesday and was supported by a combination of factors.

Dovish remarks by BoJ’s Kuroda and the risk-on impulse weighed on the safe-haven JPY.

Hot UK consumer inflation figures underpinned sterling and provided an additional boost.

The GBP/JPY cross maintained its strong bid tone through the first half of the European session and was last seen trading near a two-and-half-week high, around the 164.00 mark.

Following the previous day's modest pullback, the GBP/JPY cross caught fresh bids on Wednesday and was supported by a combination of factors. The Japanese yen weakened across the board after the Bank of Japan Governor Haruhiko Kuroda reiterated to sustain the current powerful monetary easing to support economic recovery. Apart from this, the risk-on impulse - as depicted by a positive tone around the equity markets - undermined traditional safe-haven assets, including the JPY.

On the other hand, the British pound drew some support from hotter-than-expected UK consumer inflation figures. In fact, the UK Office for National Statistics reported that headline CPI jumped from 6.2% YoY in the previous month to 7% in March - the highest level since 1992. Adding to this, the Core CPI, which excludes volatile food and energy prices, rose to 5.7% YoY from the 5.2% reported in February. This was seen as another factor that provided an additional lift to the GBP/JPY cross.

With the latest leg up, spot prices have rallied nearly 150 pips from the weekly low, around the 161.60 region touched on Monday. Expectations that the BoJ will stick to its accommodative monetary policy stance should continue to act as a headwind for the JPY and supports prospects for a further near-term appreciating move for the GBP/JPY cross. Hence, a subsequent move back towards challenging the multi-year high, around the 164.65 region touched in March, remains a distinct possibility.

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 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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Dollar riding high after index hits 100 for first time in nearly two years

The U.S. dollar index strengthened to 100 for the first time in nearly two years on Friday, supported by the prospect of a more aggressive pace of Federal Reserve interest rate hikes.

The greenback has gained ground on a basket of rivals over the past month, particularly against the euro, which has been pressured by investor concerns about the economic costs of war in Ukraine and a potentially nail-biting election in France.

The dollar index rose as high as 100 in early European trading hours, its best level since May 2020. It later lost some momentum and was last broadly flat at 99.844.

The index is up 1.3% this week, which would be its biggest increase in a month, backed by hawkish remarks from several Federal Reserve policy makers who are calling for a faster pace of interest rate increases to curb rapid inflation.

This week's release of the minutes of the Fed's March meeting showed "many" participants were prepared to raise interest rates in 50-basis-point increments in coming months.

On the other side of the dollar's rally, the euro dropped to a new one-month low of $1.0848. It later recovered and was last broadly flat on the day at $1.08770.

Meeting minutes from the European Central Bank published on Thursday suggested its policy makers are keen to act to combat inflation, but the eurozone has so far taken a more cautious tack than other central banks, weakening the euro.

A tightening election race in France between president Emmanuel Macron and far-right candidate Marine Le Pen has added to pressure on the euro, raising investor concerns about the future direction of the euro zone's second-biggest economy, though Macron is still ahead in polls.

"The upcoming French presidential election, with the first round on Sunday, is also adding to current negative EUR sentiment," currency analysts at MUFG said in a note.

The dollar extended its gains against the Japanese yen, hitting 124.23, its highest in over a week and approaching last month's near seven-year high of 125.1.

The yen has steadied this month after tumbling in March, but remains under pressure as the U.S. raises interest rates and the Bank of Japan intervenes in the bond market to keep rates low.

Sterling lost ground versus the dollar, and was last down a quarter of a percent at $1.30400.

In cryptocurrency markets, bitcoin was broadly unchanged at $43,430.

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GBP/JPY consolidates in a range around 162.00 mark, downside remains cushioned

GBP/JPY struggled to capitalize on its modest intraday gains back closer to over a one-week high.

The cautious market mood underpinned the safe-haven JPY and capped the upside for the cross.

Subdued USD demand benefitted the GBP and extended some support, at least for the time being.

The GBP/JPY cross surrendered its modest intraday gains and was last seen trading in the neutral territory, around the 161.80-161.75 region.

The cross attracted some dip-buying near the 161.40 area on Thursday and climbed back closer to over a one-week high touched the previous day, though the uptick lacked bullish conviction. The European equity markets recovered from the overnight selloff, which undermined the safe-haven Japanese yen and extended some support to the GBP/JPY cross.

Apart from this, comments from Bank of Japan board member Asahi Noguchi, saying that the central bank must stick to its ultra-easy policy despite rising inflationary pressures, also weighed on the JPY. On the other hand, some cross-driven strength stemming from the fall in the EUR/GBP cross benefitted sterling amid subdued US dollar price action.

The combination of factors did provide an intraday lift to the GBP/JPY cross, through the prevalent cautious market mood kept a lid on any meaningful upside, at least for the time being. The market sentiment remains fragile amid fading hopes for a diplomatic solution to end the war in Ukraine and the prospect of more Western sanctions on Russia.

Hence, the focus will remain on new developments surrounding the Russia-Ukraine saga amid absent relevant market moving economic releases from the UK on Thursday. The incoming geopolitical headlines would influence the risk sentiment, which, in turn, will drive demand for safe-haven assets, including the JPY, and provide impetus to the GBP/JPY cross.

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