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XAU/USD finished the week near the Fibonacci 23.6% retracement of the January-March downtrend at $1,745. According to FXStreet’s Eren Sengezer, movements of US Treasury bond yields are likely to remain the primary driver of gold’s prices throughout the week.

XAU/USD inverse correlation with US T-bond yields stays intact

“On Tuesday, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data. Investors expect the Core CPI, which excludes volatile food and energy prices, to rise to 1.5% in March from 1.3% in February. Although the Fed uses the Personal Consumption Expenditures (PCE) Price Index as its preferred gauge of inflation, a stronger-than-expected reading could have a positive impact on T-bond yields and support the USD.”  

“On Thursday, Retail Sales data will be featured in the US economic docket. The market consensus points to a 4.7% increase in March following February’s 3% contraction and a better print could fuel another rally in US stock indexes and keep the greenback’s potential gains limited. Ahead of the weekend, the Consumer Price Index data from the euro area and the first-quarter Gross Domestic Product (GDP) report from China will be looked upon for fresh impetus.”

“The initial hurdle could be seen at $1,760 and a daily close above that level could open the door for additional gains toward $1,785 (Fibonacci 38.2% retracement).”  

“If XAU/USD stays below $1,745 and confirms that level as a resistance, it could retest the 20-day SMA at $1,731 and target $1,720 (static level) afterward.”

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