Gold Price Forecast: Bears take control as concerns mount

XAU/USD Current price: $1,987.20

• Market participants struggle to retain their optimism ahead of first-tier data.
• Government bond yields are on the rise amid renewed banking-related concerns.
• XAU/USD gains bearish traction after failing to retain gains above the $2,000 mark.

Spot Gold failed to regain the $2,000 threshold on Wednesday as the market mood improved, but caution persists. XAU/USD traded as high as $2,009.34 a troy ounce early in the American session but is currently sliding below the $1,990 mark.

Demand for the US Dollar receded late Tuesday following encouraging earnings reports from big US names. Still, optimism was overshadowed by another troubled United States bank, the First Republic Bank. First Republic has been in the eye of the storm ever since Silicon Valley Bank collapsed in March but managed to stay afloat until early this week when authorities revealed customers pulled out over $100 billion in deposits. The local government has remained side-lined, even despite shares of First Republic lost 95%  of their value this year.

Stock markets are mixed, with most Asian and European indexes having closed in the red, but Wall Street is holding on to modest gains at the time being. Government bond yields, on the other hand, picked up pace, and the 2-year Treasury note currently yields 3.97%, up 7 basis points bps), while the 10-year note offers 3.44%, up 4 bps.

Meanwhile, United States data was mixed. March Durable Goods Orders rose by 3.2% MoM, much better than anticipated. The Nondefense Capital Goods Orders ex Aircraft, however, declined by 0.4%,  overshadowing the encouraging headline. Speculative interest now shifts its attention to Thursday’s data, as the US will publish the preliminary estimate of the Q1 Gross Domestic Product, expected to indicate an annualized growth of 2% in the three-month to March. Additionally, the country will publish Personal Consumption Expenditures Prices, anticipating core PCE inflation, the Federal Reserve's (Fed) favorite inflation figure.

XAU/USD price short-term technical outlook

The XAU/USD pair has spent the week hovering around the 23.6% Fibonacci retracement of its latest daily advance at $1,991.80, currently below it. The risk of a bearish extension has increased, as the pair cannot advance beyond a flat 20 Simple Moving Average (SMA), which steadies a few cents above the mentioned Fibonacci level. At the same time, the longer moving averages advance below the current level, but technical indicators gain downward strength, with the Momentum already below its midline and the Relative Strength Index (RSI) at around 52.

In the near term, and according to the 4-hour chart, the bearish case is firmer. The pair met sellers around the 100 SMA and slid below a directionless 20 SMA. Meanwhile, technical indicators head south almost vertically, the Momentum within neutral levels, but the RSI is already at 45, in line with increased selling interest.

Support levels: 1,980.80 1,969.20 1,958.64

Resistance levels: 1,991.80 2,015.00 2,028.30  

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