Gold Price Forecast: Bulls looking to recover the $2,000 mark

XAU/USD Current price: $1,980.30

• Mixed US employment data fueling back-and-forth speculation of Fed's next movement.
• Optimism prevails after the dust settles, with the US Dollar under intense selling pressure.
• XAU/USD gains bullish traction but still faces critical resistance at around the $2,000 level.

The US Dollar seesawed between gains and losses throughout the first half of Thursday as investors assessed news coming from the United States (US). The American currency finally capitulated and is under strong selling pressure, with XAU/USD now changing hands at around $1,980 a troy ounce.

The day started with optimism, as the US House of Representatives passed the bill to suspend the debt-limit ceiling, erasing the government's borrowing limit until January 2025. The better market mood weighed on the USD, which later recovered on signs of a strong labor market. The Greenback advance was short-lived, and within the employment-related data released on Thursday, the country released a robust downward revision of Q1 Unit Labor Costs, down to 4.2% in the three-month to March from 6.3% previously.

On the one hand, a strong labor market adds pressure on the Federal Reserve to maintain its aggressive monetary policy. On the other hand, easing wages pressures take off such steam, as it signals inflation continues to decline. Furthermore, the May ISM Manufacturing PMI contracted to 46.9, from 47.1 and worse than anticipated, indicating the economy remains fragile and limiting the central bank's manoeuvre capacity.

XAU/USD price short-term technical outlook

XAU/USD peaked at $1,983.09, holding nearby as speculative interest finishes digesting the news. The daily chart shows it posted a fourth consecutive higher high, usually a sign of further gains ahead. However, the pair keeps developing below a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around $1,984.30. At the same time, the pair is further recovering from a mildly bullish 100 SMA while technical indicators extend their advances, although below their midlines. Gold faces strong psychological resistance at the $2,000 threshold and may falter in a first attempt to move beyond it.

Meanwhile, XAU/USD is nearing the 38.2% Fibonacci retracement of its latest daily slide at $1,987.65, an immediate barrier on its way towards $2,000. The 4-hour chart shows that the pair has bounced from a now bullish 20 SMA and is currently trying to overcome a still bearish 100 SMA. Finally, technical indicators remain well into positive territory, the Momentum retreating, but the Relative Strength Index (RSI) still advancing at around 64. Further gains are likely near term, particularly if the positive mood persists.

Support levels: 1,966.20 1,953.60 1,944.40  

Resistance levels: 1,987.65 2,003.50 2,014.90

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