XAUUSD Price Forecast

In Monday’s Asian trade, the price of gold is steadily rising toward the $2,200 mark as the US dollar’s recovery takes a break due to low US Treasury bond yields and a choppy state of the market.

Gold price benefits from US Dollar decline

With respect to its main competitors, the US dollar is declining from a five-week high of 104.50 following fresh selling in the USD/JPY pair and a stronger-than-expected Chinese Yuan fix. The most recent decline in the US dollar is assisting the gold price in regaining its lost ground.

From Friday’s year-to-date (YTD) highs of 151.86, the USD/JPY continues to decline as growing concerns about possible Japanese government involvement in the FX market strengthen the Japanese Yen.

In contrast to the Reuters estimate of 7.2267, the People’s Bank of China (PBOC) set the USD/CNY reference rate at 7.0996. The continuing weakening of the US dollar appears to be exacerbated by rumors that Chinese officials have interfered by selling USD/CNY to bolster the Yuan.

With no new catalysts for the uptrend to resume, the gold price ends its two-day corrective slide from the new all-time high of $2,223.

Three rate cuts this year were still anticipated by the Fed’s economic estimates, which are represented by the so-called Dot Plot chart, as of January. Following two straight months of higher inflation readings, markets have started pricing in two rate cuts from the Fed this year. Following its policy meeting in March, the Fed maintained its target range of key rates at 5.25% to 5.50%.

According to the CME Group’s FedWatch Tool, markets are now pricing in a 75% possibility that the Fed will start relaxing in June, up from a 59% probability before to the Fed’s announcement.

Since there aren’t many high-impact releases pertaining to the US economy this week, the speeches made by Fed policymakers and the Core PCE Price Index data will continue to be the key points of interest.