#XAUUSD @ 1661.11 Gold meets with a fresh supply on Friday and is pressured by sustained USD buying. (Pivot Orderbook analysis)

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• Gold meets with a fresh supply on Friday and is pressured by sustained USD buying.
• Aggressive Fed rate hike bets, elevated US bond yields continue to underpin the buck.
• Recession fears weigh on investors’ sentiment and could offer support to the XAU/USD.

The pair currently trades last at 1661.11.

The previous day high was 1684.95 while the previous day low was 1655.69. The daily 38.2% Fib levels comes at 1666.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1673.77, expected to provide resistance.

Gold attracts fresh selling near the $1,675-$1.676 area on Friday and drops to a fresh daily low during the first half of the European session. The XAU/USD is currently placed just below the $1,665 level and remains confined in a familiar trading range held since the beginning of this week.

The US dollar hits a new 20-year peak on the last day of the week and is seen as a key factor exerting downward pressure on the dollar-denominated gold. Adding to this, the prospects for more aggressive policy tightening by the Fed further contribute to driving flows away from the non-yielding yellow metal.

In fact, the markets have been pricing in another supersized 75 bps Fed rate hike move in November. The bets were reaffirmed by the Fed’s so-called dot plot, revealing that policymakers expect the benchmark lending rate to top 4% by the end of 2022. From there, central bank officials anticipate further hikes in 2023.

The Fed’s hawkish outlook remains supportive of elevated US Treasury bond yields. The yield on the rate-sensitive two-year US government bond touched a fresh 15-year high and the benchmark 10-year Treasury note jumped to its highest level since 2011 on Thursday. This, in turn, should continue to act as a tailwind for the buck.

Meanwhile, faster interest rate hikes by major central banks have stoked concerns of a deeper global economic downturn. This, along with headwinds stemming from China’s zero-covid policy and the risk of a further escalation of the war in Ukraine, have been fueling recession fears and weighing on investors’ sentiment.

This is evident from the ongoing fall in the equity markets, which could extend support to the safe-haven gold and help limit deeper losses. Even from a technical perspective, the recent range-bound price action points to indecision among traders, warranting some caution before placing aggressive directional bets.

Market participants now look forward to the release of the flash US PMI prints, due later during the early North American session. The focus, however, will remain on Fed Chair Jerome Powell’s speech at an event in Washington, which will influence the USD and produce some meaningful trading opportunities around gold.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1662.81 at the time of writing. Pair opened at 1671.26 and is trading with a change of -0.51 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1701.37, 50 SMA 1732.87, 100 SMA @ 1777.47 and 200 SMA @ 1829.16.

The previous day high was 1684.95 while the previous day low was 1655.69. The daily 38.2% Fib levels comes at 1666.87, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1673.77, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1656.32, 1641.37, 1627.06
• Pivot resistance is noted at 1685.58, 1699.89, 1714.84

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