Gold Price Forecast: XAU/USD at a critical juncture, bracing for a Big week ahead

Gold price challenges the previous week’s low at $3,260 early Monday as the corrective pressure regains strength at the start of the week. Markets continue to reposition ahead of a raft of high-impact US economic data releases due later this week.  

Gold price yearns for a dip-buying amid the correction

The US Dollar (USD) keeps attracting demand on short-covering and the US-China trade war de-escalation, maintaining the bearish pressure on the USD-denominated Gold price even as the US Treasury bond yields and risk sentiment turn south again.

Markets remain jittery about the economic prospects in the world’s two biggest economies, the United States (US) and China, with highly anticipated US first-quarter (Q1) advance Gross Domestic Product (GDP) and Nonfarm Payrolls (NFP) data on Wednesday and Friday, respectively.

Amid easing US-Sino trade tensions, the focus shifts back toward the US fundamentals and the Federal Reserve’s (Fed) interest rate outlook, which will likely drive the Gold price action in the coming days.

The negative impact of US tariffs will likely be reflected in the US GDP report, and if it prints a negative growth, the odds of a June Fed rate cut will spike up. Expectant of this narrative, Gold price could witness a revival in its uptrend as geopolitical factors continue to remain supportive.

US President Donald Trump on Sunday urged Russia to stop its attacks on Ukraine. At the same time, US Secretary of State Marco Rubio warned that the US could withdraw from peace talks if there’s no meaningful progress, according to Reuters.  

Meanwhile, Reuters cited a report from the China Gold Association, stating that the country’s Gold consumption fell by about 6% in Q1, while Gold exchange-traded funds (ETF) holdings in China increased by 327.73% on an annual basis in the same period. 

Looking ahead, the Gold price and the USD remain at the mercy of the US trade headlines in the countdown to the critical US data releases, starting Tuesday.

Gold price technical analysis: Daily chart

The Gold price record run and the following correction seem to be teasing a downside break from a three-week-long rising channel formation on the daily chart.

The 14-day Relative Strength Index (RSI) points south, currently near 58, backing the latest descent. However, the leading indicator still holds above the midline, suggesting that dip-buying could emerge at the critical $3,260 support area (the previous week’s low).

In case, Gold price closes Monday below the rising trendline support at $3,300, it would confirm a rising channel breakdown, opening doors for a fresh downtrend toward the $2,975 region, from where the record rally began in early April.  

The immediate healthy support level aligns at the $3,260 area, below which the 21-day Simple Moving Average (SMA) at $3,200 and the 50-day SMA at $3,058 will be tested.

On the flip side, if Gold buyers manage to defend the abovementioned channel support at $3,300, a rebound toward the $3,370 static resistance will be inevitable.

A sustained recovery will target the $3,400 and the record high of $3,500 thereafter.