Gold Price Forecast: XAU/USD eyes a sustained break above $1,980 amid chaos over Fed’s rate guidance
|- Gold price is aiming for a sustained break above $1,980 as Fed policymakers are divided about June’s interest rate policy.
- Fed Harker and Jefferson advocated a pause in the policy-tightening spell while Fed Mester sees no reason for a pause.
- Gold price is gathering strength for breaking above the horizontal resistance at $1,984.25 after a downward-sloping trendline breakout.
Gold price (XAU/USD) has sensed marginal selling pressure after failing to sustain above the crucial resistance of $1,980.00 in the Asian session. The precious metal showed a solid upside on Thursday, capitalizing efficiently on a sell-off in the US Dollar Index (DXY).
S&P500 futures have added nominal gains in Asia. The risk-appetite theme is in action as US equities were heavily bought on Thursday after Federal Reserve (Fed) policymakers remained divided over their stance about interest rate guidance for June’s monetary policy meeting.
The US Dollar Index (DXY) was badly beaten after support for a pause in the rate-hiking spell from Fed policymakers. Philadelphia Federal Reserve Bank President Patrick Harker and Fed Governor Philip Jefferson favored a neutral interest rate policy and advised them to remain dependent on economic indicators. However, Cleveland Fed Bank President, Loretta Mester doesn’t see a compelling reason of pausing the policy-tightening regime.
It seems that confusion over interest rate action would ease sharply after the release of the United States Nonfarm Payrolls (NFP) data (May). Analysts at Wells Fargo expect NFP to increase by 200K. They believe it is important to keep a close eye on wage growth and the labor force participation numbers. The labor force has grown at a healthy pace over the past year, and a further deceleration in wages alongside expanding supply would be an encouraging sign in the Federal Reserve's fight to get inflation back to 2%.
Gold technical analysis
Gold price has delivered a breakout of the downward-sloping trendline plotted from an all-time high at $2,079.76 on a two-hour scale. The precious metal is gathering strength for breaking above the horizontal resistance plotted from May 19 high at $1,984.25.
A bull cross, represented by the 20-and 50-period Exponential Moving Averages (EMAs) at $1,954.70, advocates more upside ahead.
The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates that the upside momentum is active now.
Gold two-hour chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.