Gold Price Analysis: XAU/USD approaches the golden ratio of 61.8 percent

Following a rise into the 50 percent mean reversion level of the hourly bullish impulse highlighted in previous trading, the gold price is retreating further to $1,852 as demonstrated by the technical analysis below. The US dollar has been on the ascendant over the middle of the week and has maintained its strength in Asia, as assessed by the DXY index.

The US dollar index increased on Wednesday, reversing earlier drops, after investors exited equities and the US 10-year auction yielded 3.03 percent, up from 2.943 percent at the previous auction. In addition, the dollar set a new 20-year high versus the yen, as the Bank of Japan remained one of the few global central banks to retain a dovish approach. The ensuing increase in US rates has resulted in the 10-year holding over 3%, bolstering the greenback.

Gold has been praised for its safe-haven attributes prior to the OECD's predictions that the world will pay a heavy price for the Ukraine conflict. It reduced its forecast for global growth this year from 4.5 percent in December to 3 percent. This follows the revision of the World Bank's growth prediction earlier this week. Gold surrendered some of its late-session gains as the US dollar gained, according to ANZ Bank analysts.

In the meanwhile, analysts at TD Securities explained: "although the war in Ukraine helped send the bears packing, the waning of geopolitical risk premia across global assets has not prompted this group of discretionary traders to liquidate their positions.

"In turn, the disparity between gold and real rates may be linked to both an unwarranted rise in real rates owing to quantitative tightening and the still-massive amount of complacent length maintained in gold, which is keeping the yellow metal's prices high."

The focus will shift to the European Central Bank tomorrow as markets prepare for Friday's US inflation report.

The analysts at TD Securities stated that until Christine Lagarde "commits to a series of 50s," the EUR/USD has little upside potential, especially with the Euribor curve trading as it is and US CPI expected the next day. The risk/reward ratio favors a decline in EUR/USD trading. The long-term inflation outlook will be crucial.

TDS researchers also predicted that the ECB will "announce that the APP will terminate within weeks and convey a clear signal that rate rises are coming in July and September (October remains a more interesting meeting in this sense). Forecasts indicate a rise in inflation and a slowdown in economic growth, underscoring the ECB's future difficulty.

Consequently, gold may be desirable due to its safe-haven features. The worsening economic environment has allowed investors to support the precious metal. Gold recently surpassed $1,850 despite a stronger USD.