Gold Price Forecast: Will XAU/USD attempt another run toward $2,000?

Gold price is attempting a bounce back toward $2,000 on Friday.
US Dollar consolidates recovery gains as US Treasury bond yields retreat.
Gold price could see another run toward two-month highs as RSI stays bullish.

Dhwani Mehta FXStreet

Gold price is attempting a tepid bounce back toward $2,000 early Friday. A minor pullback in the United States Dollar (USD) alongside the US Treasury bond yields motivates Gold buyers in a relatively quiet day ahead.

Hawkish Federal Reserve bets back on the table?

On Thursday, the US Dollar witnessed good two-way businesses, which stirred volatility around the Gold price. In the first half of the day, the Greenback faded its recovery momentum, as the recent housing data from the United States disappointed and added to speculations that the US Federal Reserve (Fed) could be nearing the end of its tightening cycle.

Dovish Fed bets overshadowed China’s growth worries-led risk-off market mood, failing to support the safe-haven US Dollar. The renewed weakness in the US Dollar allowed Gold buyers to flex their muscles, driving Gold price to fresh two-month highs of $1,988.

In American trading, however, the tide turned against Gold price as the Greenback staged a solid comeback, tracking the rebound in the US Treasury bond yields. Risk sentiment worsened after US stocks and Treasuries fell following disappointing tech earnings and renewed hawkish Fed expectations.

US weekly Jobless Claims data indicated fresh signs of labor market resiliency, supporting the case for another rate hike this year after the expected 25 basis points (bps) increase next week. The latest data published by the US Labor Department showed Thursday the initial Unemployment Claims fell by 9,000 to 228,000 in the week ended July 15 against 237,000 in the previous week, hitting a two-month low.

Gold price could extend the rebound in the day ahead should the US Dollar pullback gather strength on probable end-of-the-week flows and pre-Fed decision position readjustments. The United States economic data remains data-dry and, hence, prevalent broader market sentiment and US earning reports will lead the way.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price failed to find acceptance above the crucial resistance at the May 24 high of $1,985 on a daily closing basis, fuelling a U-turn in the second half of the trading day on Thursday.

Gold price, however, latched on to the $1,970 static support. In Friday’s trading, buyers are trying to recover some ground. The initial upside hurdle is seen at the $1,980 round figure, above which the abovementioned May 24 high at $1,985 could challenge bearish commitments once again.

The following relevant target for Gold buyers aligns at the May 17 high of $1,993, as they remain poised to test the $2,000 mark.

The 14-day Relative Strength Index (RSI) looks north above the midline, suggesting that the rebound could gain momentum in the day ahead.

On the flip side, if Gold sellers fight back control, the $1,970 support will be tested again. A breach of the latter will expose the bullish 100-Daily Moving Average (DMA) at $1,961.

Extending the corrective move lower will call for a test of the $1,950 psychological level.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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