Gold Price Forecast: XAU/USD recovery falters as Oil and yields rise

Gold (XAU/USD) edged higher on Thursday, hovering around the $4,125 region after a rebound from a two-month low of $4.066 on Wednesday. Nevertheless, bullish momentum remains restrained due to factors like oil prices surging due to ongoing clashes in the Middle East, and US long-term Treasury yields nearing multi-decade highs. Crude Oil experienced a significant surge on Thursday following reports of additional Houthi militia strikes on Saudi Arabian airports, resulting in three fatalities.

These escalating tensions between Saudi Arabia and Yemeni Houthi rebels, backed by Riyadh, have intensified and could potentially escalate into further attacks on Saudi oil facilities. Consequently, higher energy costs are exerting upward pressure on Treasury yields, driven by expectations of the Federal Reserve (Fed) raising interest rates to curb inflation.

This has bolstered demand for the US Dollar (USD), which, in turn, is putting downward pressure on precious metals. XAU/USD is currently trading at $4,124, retaining a bearish stance as it trades below the broken downward trendline from late August highs. The Relative Strength Index (14) on the 4-hour chart remains below the neutral 50 midline, while the Moving Average Convergence Divergence (MACD) is slightly negative, indicating moderate bearish momentum.

For bulls to gain confidence and move the market towards the September 25 highs near $4,300, they must first push through the $4,190 trendline resistance and preferably also the September 16 and 24 lows around $4,240. Failure to achieve this could prompt bears to revisit Wednesday's low of $4,066 and subsequently target the late-July lows in the $4,000 range.

Financial news editor and copywriter Guillermo, with a background in Communication Sciences from the Universidad del Pais Vasco and Universiteit van Amsterdam, has contributed to diverse Forex-related firms such as FXStreet and Kantox.