Gold Price Forecast: XAU/USD bears a fraction from $1,732 daily targets

• Gold is on the way to its daily target at $1,732 following US dollar strength. 
• The bears are well in control as markets brace for inflation impact ad the Fed's resolve. 

Gold is flat in Asia following an intense day of risk-off that started the turn of the European session on Tuesday, whereby US yields rallied taking the US dollar along for the ride and sending global stocks sharply lower. Gold sank to a fresh daily low of $1,728 from a high of $1,760.91.

US dollar firming

The greenback was the highest in 10 months while the market's priced in the prospects of the Federal Reserve possibly reducing asset purchases in November and an interest rate hike likely to follow. The 10-year Treasury yields ran up to score a three-month high and were last up to a high of 1.5530% in recent trade.

This follows last week's hawkish twist from the US central bank that has taken a while to finally impact markets whereby the Fed has reinforced the market view for a sooner-than-expected Fed taper. In recent trade, we heard from James Bullard who is uber hawkish, echoing the rhetoric that we heard from Treasury Secretary Janet Yellen who said she expected inflation to end 2021 near 4%.

Despite the threat of inflation, gold has lost its lustre as global markets increasingly price the Fed's exit, as analysts at TD Securities explained. 

''While 'talking about talking' about tapering removed the sting from the signalling channel of quantitative easing, the recent rise in rates likely reflects the stock effect which is, in turn, impacting precious metals.''

''Looking forward, the 'stagflation' narrative is still capturing the market's share of mind, as participants look to a period of high inflation and slowing growth, but this has yet to translate into additional interest for gold,'' the analysts added. 

Gold technical analysis

The following was explained yesterday's analysis and at the start of the week, ''should the price fails to overcome $1,760 on a closing basis in the coming sessions, this could give rise to further supply and a downside extension.''

The corrections, as illustrated as A and B on the chart below, showed their targets based on the -272% Fibonacci retracements of the correction's ranges. These come in at $1,732 and $1,728:

Then, from an hourly basis, despite the hidden bullish divergence, the price was pressured below critical moving averages with bearish divergences as follows:

The outcome...?

For a more comprehensive analysis of the gold price, see more here:

• Gold, Chart of the Week: XAU/USD bearish bias forecast below $1,760

However, going forward, we can expect some consolidation at this juncture with 1,732 targets on the daily extension:

 However, the weekly outlook remains bearish towards 1,675 to meet the monthly 61.8% Fibo target again: