Gold Price Forecast: XAU/USD's recovery finds resistance at the $1780 area

• Gold holds a positive tone despite stronger US dollar and risk aversion.
• XAU/USD rises 40$ from Monday’s lows, finds resistance around $1780.
• Focus turns to FOCM meeting and US yields.

Gold prices are rising for the second day in a row, extending the recovery after reaching on Monday at $1741, the lowest level in a month. XAU/USD hit fresh highs slightly above $1780 before pulling back modestly.

Recovering its shine

In the very short term, XAU/USD holds a positive tone but it needs to break $1780 to clear the way to more gains. The next resistance might be seen at 1785$ and then $1795 (20-day simple moving average). On the downside, now $1766 is the key support. A consolidation under $1760 should increase the bearish pressure for another test of the 1745/50 support.

The recovery on Tuesday took place even as Wall Street continues to be dominated by concerns. Also, ahead of the FOMC decision. No change in rates is expected from the Fed. The central bank could prepare markets for a tapering in its purchase program.

US yields moved sideways on Tuesday. The 10-year yield peaked at 1.346% before pulling back to 1.314%. Fed’s statement could trigger sharp moves in the bond market that would lead to volatility in gold prices.

Technical levels