Gold Price Forecast: Range play likely to extend ahead of NFP on Friday
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UNLOCK OFFER- A combination of factors assisted gold to regain some positive traction on Wednesday.
- Sliding US bond yields kept the USD bulls on the defensive and extended some support.
- The risk-on mood capped gains as the focus remains on Friday’s US monthly jobs report.
Gold attracted some dip-buying on Wednesday and reversed the previous day's modest pullback from the highest level since early January. The US dollar struggled to preserve its intraday gains to weekly tops amid a weaker tone surrounding the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the dollar-denominated commodity.
Apart from this, firming expectations that the Fed will retain its ultra-lose monetary policy for a longer period further acted as a tailwind for the non-yielding yellow metal. Various FOMC officials have downplayed worries about runaway inflation and reiterated that any spike in prices would prove to be temporary. Investors now seem aligned with the Fed's stubbornly dovish view and have been scaling back their bets for an earlier than anticipated Fed lift-off.
The commodity finally settled near the top end of its daily trading range, albeit lacked any strong follow-through, instead met with some supply during the Asian session on Thursday. The underlying bullish sentiment in the equity markets seemed to be the only factor weighing on the safe-haven XAU/USD. Investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of Friday's release of the US Non-Farm Payroll figures.
In the meantime, a slew of important US macro data will be looked upon for some impetus later during the early North American session. Thursday's US economic docket highlights the releases of the ADP report on private-sector employment, the usual Initial Weekly Jobless Claims and the ISM Services PMI. This, along with the US bond yields, might influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for meaningful opportunities.
Short-term technical outlook
From a technical perspective, the commodity has been oscillating in a familiar trading band around the $1,900 mark over the past one week or so. The range-bound price action constitutes the formation of a rectangle on short-term charts, marking a pause in the trend. Given the recent strong positive move, this might still be categorized as a bullish continuation pattern. That said, it will still be prudent to wait for a sustained strength beyond multi-month tops, around the $1,913-15 region before positioning for any further appreciating move. The precious metal might then aim to surpass an intermediate resistance near the $1,925 level and accelerate the momentum further towards the $1,950 level.
On the flip side, any meaningful slide below the $1,900-$1,895 region is likely to find decent support near the $1,882 region. This is followed by the $1,870-68 horizontal support, which if broken decisively might prompt some long-unwinding trade. The metal might then turn vulnerable and accelerate the fall further towards the $1,852-50 support zone. The corrective pullback, however, might still be seen as a buying opportunity. This, in turn, should help limit the downside near the very important 200-day SMA, around the $1,843 region.
- A combination of factors assisted gold to regain some positive traction on Wednesday.
- Sliding US bond yields kept the USD bulls on the defensive and extended some support.
- The risk-on mood capped gains as the focus remains on Friday’s US monthly jobs report.
Gold attracted some dip-buying on Wednesday and reversed the previous day's modest pullback from the highest level since early January. The US dollar struggled to preserve its intraday gains to weekly tops amid a weaker tone surrounding the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the dollar-denominated commodity.
Apart from this, firming expectations that the Fed will retain its ultra-lose monetary policy for a longer period further acted as a tailwind for the non-yielding yellow metal. Various FOMC officials have downplayed worries about runaway inflation and reiterated that any spike in prices would prove to be temporary. Investors now seem aligned with the Fed's stubbornly dovish view and have been scaling back their bets for an earlier than anticipated Fed lift-off.
The commodity finally settled near the top end of its daily trading range, albeit lacked any strong follow-through, instead met with some supply during the Asian session on Thursday. The underlying bullish sentiment in the equity markets seemed to be the only factor weighing on the safe-haven XAU/USD. Investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of Friday's release of the US Non-Farm Payroll figures.
In the meantime, a slew of important US macro data will be looked upon for some impetus later during the early North American session. Thursday's US economic docket highlights the releases of the ADP report on private-sector employment, the usual Initial Weekly Jobless Claims and the ISM Services PMI. This, along with the US bond yields, might influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for meaningful opportunities.
Short-term technical outlook
From a technical perspective, the commodity has been oscillating in a familiar trading band around the $1,900 mark over the past one week or so. The range-bound price action constitutes the formation of a rectangle on short-term charts, marking a pause in the trend. Given the recent strong positive move, this might still be categorized as a bullish continuation pattern. That said, it will still be prudent to wait for a sustained strength beyond multi-month tops, around the $1,913-15 region before positioning for any further appreciating move. The precious metal might then aim to surpass an intermediate resistance near the $1,925 level and accelerate the momentum further towards the $1,950 level.
On the flip side, any meaningful slide below the $1,900-$1,895 region is likely to find decent support near the $1,882 region. This is followed by the $1,870-68 horizontal support, which if broken decisively might prompt some long-unwinding trade. The metal might then turn vulnerable and accelerate the fall further towards the $1,852-50 support zone. The corrective pullback, however, might still be seen as a buying opportunity. This, in turn, should help limit the downside near the very important 200-day SMA, around the $1,843 region.
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