Gold Price Forecast: XAU/USD aiming for $3,300 amid concerns about the US economy

XAU/USD Current price: $3,280.87

• Central banks keep citing US President Trump's policies as a source of concern.
• The US Congress will discuss a bill on tax cuts, which will add to the country’s massive debt.
• XAU/USD pressures fresh one-week highs, aiming to extend its advance.

Gold surged during US trading hours on Tuesday, hitting a one-week high of $3,285.84 and trading nearby at the time of writing. Financial markets were cautiously optimistic throughout the first half of the day, but the mood soured after Wall Street’s opening, with US indexes trading in the red.

The US Dollar (USD) came under selling pressure amid renewed concerns about United States (US) President Donald Trump's protectionism measures and the out-of-control government's debt. Concerns arose ahead of Trump’s tax bill, which will be discussed in Congress today. The bill would add between $3 trillion and $5 trillion to the debt, according to nonpartisan analysts, Reuters reported.

The discussion takes place after Moody Ratings downgraded the government’s credit rating, citing concerns over the nation's growing $36.2 trillion debt pile. Trump even said that the alternative to not passing the tax bill is massive tax hikes, which adds to the dismal mood.

Meanwhile, trade talks between the US and major counterparts continue. The focus is now on negotiations with Japan, with mounting tensions between the two countries amid US demands. There are no fresh headlines on US-China talks, which also weigh the sentiment lower.

Data-wise, there’s little in the macroeconomic calendar in the US side, but there worth noting that the People’s Bank of China (PBoC) cut its Loan Prime Rates (LPRs) early on Tuesday, while the Reserve Bank of Australia (RBA) also delivered an interest rate cut, lowering the Official Cash Rate (OCR) to 3.85% from 4.1%. RBA officials stated the escalation of the global trade conflict was a key downside risk to the economy.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for the XAU/USD pair shows it reached resistance at around a mildly bearish 20 Simple Moving Average (SMA) currently at $3,287.80, while the 100 and 200 SMAs maintain their firmly bullish slopes far below the current level. Technical indicators, in the meantime, gain upward traction but remain around their midlines. The bright metal would need to extend its rally beyond the $3,300 threshold to confirm a sustained leg higher.

The near-term picture is bullish, yet could. The 4-hour chart shows the pair broke above its 200 SMA, while the 20 SMA gains upward traction below the longer one. At the same time, the pair is battling a mildly bearish 100 SMA. Finally, technical indicators advanced well above their midlines, although the Relative Strength Index (RSI) stabilized around 60, hinting at a consolidative stage before a new leg north.

Support levels: 3,265.40 3,252.10 3,235.70

Resistance levels: 3,287.60 3,300.00 3,312.90