Gold Price Forecast: XAU/USD buyers refuse to give up ahead of US macro data

  • Gold price finds buyers to once again retest two-week highs of $2,041 early Wednesday.
  • US Dollar extends rebound but weak Treasury bond yields could cap the upside.
  • The 4H technical setup appears constructive, as Gold price awaits US data.

Gold price is duplicating the price action seen during Tuesday’s Asian trading, as bulls attempt another comeback early Wednesday. The US Dollar (USD) is building on the previous recovery, despite a minor pullback in the US Treasury bond yields, as markets turn tentative ahead of a fresh batch of US GDP and PCE data due later in the day.

Gold continues to find dip-demand

Markets are seemingly quiet, digesting the Reserve Bank of New Zealand’s (RBNZ) dovish hold decision on the interest rate. Traders take profits off the table on their recent US Dollar short positions, awaiting a fresh directional impetus on the upcoming US economic data releases.

The US Gross Domestic Product (GDP) second estimate for the fourth quarter and the PCE deflator could help the markets reprice the Federal Reserve (Fed) interest rate cut bets for this year. Markets are currently pricing in about an 80% chance of a no rate cut by the Fed in the May meeting while the probability that the Fed will begin lowering rates in June stands at 60%, down from about 70% seen last week.

The sentiment surrounding the expectations of a Fed policy pivot will continue to drive the value of the US Dollar, as well as, the Gold price in the sessions ahead.

Gold price has been struggling to resist above the $2,033 level so far this week, having hit a two-week high of $2,041 last Friday. The uptrend in the US Treasury bond yields, in the wake of hawkish commentary from Fed officials, is keeping Gold price upside restricted.

Fed Governor Michelle Bowman said on Tuesday that slower-than-expected progress on inflation has left her cautious about monetary policy stance. Earlier in the day, Kansas City Fed President Jeffrey Schmid, a new hawk, noted that there is “no need to preemptively adjust the stance of policy.” “Fed should be patient, wait for convincing evidence that inflation fight has been won,” Schmid added.

Gold price technical analysis: Four-hour chart

Following an upside breakout from the pennant on Tuesday, Gold price extended higher but ran into offers just below the two-week high of $2,041.

At the moment, Gold price is struggling around the 21-Simple Moving Average (SMA) at $2,033.

Acceptance above that level is needed on a four-hour candlestick closing basis to revive the uptrend.

The 50-Simple Moving Average (SMA) is on the verge of cutting the 200-SMA for the upside. If that happens, a Golden Cross formation will be confirmed, opening doors for a fresh upsurge.  

The Relative Strength Index (RSI) is holding well above the midline, backing the bullish potential.

The immediate resistance for Gold price aligns at the two-week high of $2,041.

Further up, the $2,050 psychological barrier will challenge the bearish commitments, as Gold buyers target the static resistance at around $2,065.

On the other side, a failure to resist above the 21-SMA at $2,033, Gold price could see a fresh downswing toward the immediate demand area around near $2,026, which is the confluence zone of the 50- and 200-SMAs.

A breach of the latter could trigger a fresh drop toward the 100-SMA at $2,022. The last line of defense for Gold buyers is Friday’s low of $2,016.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD clings to daily gains above 1.0650

EUR/USD clings to daily gains above 1.0650

EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.


GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.


Gold holds steady at around $2,380 following earlier spike

Gold holds steady at around $2,380 following earlier spike

Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.

Gold News

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in

Bitcoin price shows no signs of directional bias while it holds above  $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research. 

Read more

Week ahead – US GDP and BoJ decision on top of next week’s agenda

Week ahead – US GDP and BoJ decision on top of next week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.

Read more