Gold Price Forecast: XAU/USD bulls pause just shy of $1,950, US Gross Domestic Product eyed

Gold price is treading water near the highest level in nine months at $1,949 in Thursday’s trading so far, having witnessed good two-way businesses amid heightened volatility on Wednesday. The United States Dollar (USD) is licking its wounds alongside the US Treasury bond yields heading into the critical US Preliminary Gross Domestic Product (GDP) for the fourth quarter.

All eyes on the United States Q4 Gross Domestic Product

The US Dollar seems to have paused its run of losses, as investors resort to repositioning ahead of the high-impact United States Gross Domestic Product first estimate, which is due for release at 13:30 GMT. The annualized US Q4 Gross Domestic Product is foreseen at 2.6% vs. 3.2% previous while the Gross Domestic Product Price Index is seen easing to 3.3%. The United States Durable Goods Orders, weekly Jobless Claims and Core Personal Consumption Expenditures will be reported parallelly but the American growth numbers will likely stand out amid looming risks of a potential US recession.

The recent series of downbeat United States economic data, including the Retail Sales, Industrial Production and Manufacturing PMI, has revived concerns over the health of the US economy, boosting expectations of smaller rate hikes from the US Federal Reserve in the upcoming policy meetings.

Risk sentiment holds the key to Gold price

The United States Gross Domestic Product data is likely to have a significant impact on risk sentiment, which will eventually influence the US Dollar valuations. Investors will likely re-price Federal Reserve policy expectations, in the face of the US economic outlook in the year ahead. At the time of writing, the US S&P 500 futures are marginally higher on the day, buoyed by Tesla Inc. earnings report. The United States electric vehicle (EV) giant reported fourth-quarter profits of $3.7 billion, up 59% from the year-ago period as revenues jumped 37% to $24.3 billion.

Gold price technical analysis: Daily chart

Having tested the upper boundary of a rising wedge pattern on multiple instances this week, Gold price finally broke above the latter on a daily closing basis on Wednesday. That upside hurdle is now aligned at $1,945.

The natural tendency of the rising wedge is usually to yield a downside break. Therefore, Gold buyers remain skeptical, especially awaiting the first estimate of the United States Gross Domestic Product (GDP) release.

Should the key US economic data disappoint, implying signs of slowing down in the American economy, the US Dollar could stage a solid recovery across the board. As a result, Gold price could extend its corrective downside to test the wedge support at $1,937.

Further south, Gold sellers are expected to challenge the previous day’s low at $1,920, below which a test of the $1,900 mark will be inevitable.

Gold sellers, however, need a daily closing below the lower boundary of the rising wedge formation, now at $1,933, to confirm a downside break.

The 14-day Relative Strength Index (RSI) is back in the overbought territory, which could provide extra legs to the Gold price correction.

However, if the United States' growth figures dismiss recession fears, which could fuel a risk rally on global markets and down the demand for the safe-haven US Dollar. In such a scenario, Gold price could see a fresh rally above the $1,950 psychological level.

The next upside target for Gold bulls is envisioned around April 20 2022 highs near $1,958. A sustained move above the latter will bring the last April high of $1,998 back into the picture.