Gold Prices Surge on Softer Treasury Yields Amid Fed Tightening

Gold prices rose to around $4,400 on Friday as softer US Treasury yields helped offset the drag from the Federal Reserve's hawkish move earlier in the week. The Fed raised interest rates by 25 basis points on Wednesday to a 3.75-4% range, and Chair Kevin Warsh reiterated the inflation-fighting stance. Despite this, markets continued to price further tightening, but falling Treasury yields supported non-yielding gold.

The metal rebounded from one-and-a-half-month lows below $4,250, seeking to end a three-week losing run. Central banks remain major buyers, adding 1,136 tonnes worth about $70 billion in 2022, and their demand continues to support the metal's floor. Gold is priced in US dollars, so a weakening dollar would act as a powerful catalyst for gold prices.

Technically, XAU/USD has reduced weekly losses but remains below the 200-day simple moving average at $4,541. The daily Relative Strength Index (RSI) is just above neutral, while the Moving Average Convergence Divergence (MACD) stays negative. Resistance is seen near $4,450, with a higher band between $4,510 and the 200-day SMA.