Gold Price Forecast: XAU/USD corrects below $4,500 as Yields recover some losses

Gold (XAU/USD) fell 0.7%, nearing $4,490 in European trading on Thursday as US Treasury yields rebounded slightly. The precious metal retreated from its 11-week high of $4,527 earlier in the day. Higher yields on interest-bearing assets reduce the appeal of non-yielding assets like gold. US 10-year bond yields climbed 0.67%, to about 4.67%, while 30-year yields rose 0.5% to around 5.21%.

Earlier, the US Treasury Department announced that it would double the maximum size of its liquidity-support buyback operations for longer-dated nominal securities, aiming to curb rising borrowing costs. Analysts stated that the Treasury's move doesn't fully address the underlying issues driving bond yields higher, which include unsustainable fiscal deficits and increasing inflation expectations.

Technical analysis shows that XAU/USD is currently trading at $4,490.45, above the 20-day Exponential Moving Average (EMA) at $4,299.17, with a bullish near-term bias. Immediate support is seen at the recent closing area near $4,490, with a deeper layer of demand at the 20-day EMA near $4,299. Central banks, concerned about currency stability, often diversify reserves by buying gold.

In 2022, central banks added 1,136 tonnes of gold worth approximately $70 billion to their reserves, the highest yearly purchase since records began.