Gold Price Forecast: XAU/USD bulls testing bearish commitments, as focus shifts to US NFP

Gold price staged an impressive rebound on Wednesday, as the sentiment towards the yellow metal improved amid month and quarter-end adjustments. Growing economic risks, courtesy of the Delta covid strain flareup in Asia and the UK, dampened the market mood and boosted the traditional safe-haven gold. Meanwhile, the US dollar also benefited from the Fed’s hawkish policy stance and covid concerns, although failed to hamper gold’s recovery from two-month lows of $1751. Gold tumbled on Tuesday amid a firm dollar and Basel III regulations. The new liquidity requirements for European banks aim to “prevent dealers and banks from simply saying they have the gold, or having more than one owner for the gold they have” on the balance sheet. 

This Thursday, gold is adding onto the previous recovery gains despite the ongoing US dollar’s strength and an uptick in the Treasury yields. However, it remains to be seen if gold price sustains the recovery, as traders turn cautious ahead of the US ISM Manufacturing PMI, with the focus on the employment sub-index, especially after the ADP NFP outpaced expectations. Also, with the leading indicator to Friday’s NFP report, markets remain hopeful that upbeat numbers could ramp up Fed’s hawkish expectations, in turn, negatively impacting gold price.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

Heading into the critical US economic data, gold’s four-hour chart has charted a falling wedge breakout, having closed the falling trendline resistance at $1775.

At the time of writing, the bulls are challenging the horizontal 50-Simple Moving Average (SMA) at $1777.

Acceptance above the latter could add legs to the recovery momentum, sparking a rally towards $1800. The buyers will then target the bearish 100-SMA at $1812.                                    

The Relative Strength Index (RSI) is gradually inching higher above the midline, currently at 54.23, suggesting that bulls could extend control in the near term.

Alternatively, a four-hourly candlestick closing below the downward-sloping 21-SMA at $1770 could recall the sellers and threaten the previous week’s low of $1761.

Further south, the two-month lows near $1750 could be next on their radars.