Gold Price Forecast: XAU/USD bulls look to $2,050 again ahead of critical United States data

Following Friday’s extended correction from the all-time-highs of $2,080, Gold price is consolidating at around the $2,020 region, awaiting the US Federal Reserve’s (Fed) loan officer survey and the critical Consumer Price Index (CPI) data from the United States for fresh directional impetus.

Gold price gears up to resume the upside

After another down week, the beleaguered United States Dollar (USD) is seeing a brief reprieve at the start of a big week on Monday, allowing Gold price to tread water following a volatile last week. US banking sector fears rattled markets past week and spurred the safe-haven flows into the traditional safe-haven Gold.

US bank shares plunged, as a crisis of confidence in the country's banking sector continued. Shares in California-based PacWest plunged 50%, while Western Alliance also tumbled nearly 40%. The sell-off in bank shares gathered steam this week after the First Republic was seized by regulators and sold to America's biggest bank, JPMorgan Chase. In light of this, Gold price extended its upsurge and renewed fresh record highs at $2,080 last Thursday.

Dovish Federal Reserve policy announcements accompanied by the cautious take from Chairman Jerome Powell on the country’s banking sector weighed heavily on the US Dollar, adding to the strength in the USD-denominated Gold price. Although the swift recovery in the US Treasury bond yields during the latter part of the week, revived Gold sellers, as they fuelled a solid correction in the Gold price to test the $2,000 threshold.

On Friday, the headline US Nonfarm Payrolls (NFP) jumped by 253K in April, compared with 179K expected and the previous figure of 165K. The Unemployment Rate unexpectedly ticked lower to 3.4% in April while the annualized Average Hourly Earnings rose to 4.4% in the reported month vs. 4.2% expected. The US Dollar rebound picked up pace on strong jobs gains in the United States.

The end-of-the-week flows coupled with the pre-US inflation data repositioning prompted investors to take profits on their Gold longs. So far this Monday, Gold price is looking to regain the upside traction, as the US Dollar is likely to portray bearish vibes amid the looming US default risks.

“US Treasury Secretary Janet Yellen on Sunday issued a stark warning that a failure by Congress to act on the debt ceiling could trigger a "constitutional crisis" that also would call into question the federal government's creditworthiness,” Reuters reported.

Further, Gold price is receiving some support from the news that the People’s Bank of China (PBOC) bumped up its Gold reserves for the sixth consecutive month. Global Times reported, “China increased its gold reserves for the sixth consecutive month in April to 66.76 million ounces (1,893 tons). China's gold reserves grew 260,000 ounces month-on-month, data from the People's Bank of China showed on Sunday, with 4.12 million ounces of gold being purchased since November 2022.”

United States bank lending data and Consumer Price Index in focus

Later Monday, the Fed's loan officer survey will be closely scrutinized, as it might show how hard credit conditions are tightening after three United States regional lenders failed over recent weeks. Downbeat data is likely to exacerbate the pain in the US Dollar, aiding Gold price to resume its bullish momentum.

Traders will also pay close attention to headlines from Capitol Hill as lawmakers attempt to negotiate an impasse over the looming US debt ceiling. US Consumer Price Index data, due on Wednesday, will be of utmost importance for Gold traders to gauge the Federal Reserve’s interest rates move.

Gold price technical analysis: Daily chart

  

As observed on the daily chart, Gold price is defending the horizontal 21-Daily Moving Average (DMA) at $2,005 after changing course on Friday to challenge it.

So long as Gold buyers manage to hold the fort above the latter, the bullish potential in Gold price is likely to remain intact toward the immediate resistance at $2,050.

Ahead of that, Gold bulls need to clear Thursday’s low of $2,030. The 14-day Relative Strength Index (RSI) is inching higher above the midline, supporting the upside bias.

On the flip side, daily candlestick closing below the 21 DMA or the $2,000 psychological mark will strengthen the ongoing corrective move, opening floors for a test of the wedge resistance-turned-support at $1,976, which coincides near the last week’s low.

Note that Gold price confirmed a bullish wedge on May 2 after storming through the $1,993 on a daily closing basis.