Gold Price Forecast: XAU/USD challenging the $2,020 mark

XAU/USD Current price: $2,020.86

• Stock markets welcomed robust earnings reports, posted gains in all sessions.
• United States macroeconomic data indicated resilience, US Dollar trimmed early losses.
• XAU/USD seem to have pared the near-term bleeding, but the risk remains skewed to the downside.

Spot Gold eased from a fresh multi-week high of $2,034.86. The US Dollar edged sharply lower during Asian trading hours and remained on the back foot through most of the European session but turned higher ahead of Wall Street’s opening. The early slide can be attributed to a rally in tech stocks, pushing Asian and European indexes sharply higher.  

United States (US) indexes rallied ahead of the opening, but that did not prevent the USD from recovering ground following the release of US data. The country reported that Initial Jobless Claims increased by less than anticipated in the week ended February 16, up 201K vs the 218K expected. Additionally, S&P Global published the flash estimate of the February Producer Manager Indexes (PMIs), showing manufacturing activity expanded at the fastest pace since September 2022, with the index jumping to 51.5 from 50.7 in January. The services index printed at 51.3, shrinking from 52.5 previously and missing expectations of 52, while the Composite PMI was confirmed at 51.4, slightly below the 52 posted in January.

Meanwhile, government bond yields pressure multi-week highs, with the 10-year Treasury note currently hovering around 4.31% after an early peak of 4.35%. Yields surged on Wednesday following the release of the Federal Open Market Committee (FOMC) meeting Minutes. The document confirmed officials are in no rush to cut rates, as they would prefer to see more evidence of inflation progress before trimming rates. Policymakers highlighted the risks of “moving too quickly,” although acknowledging the policy rate is likely at its peak for this tightening cycle.

XAU/USD short-term technical outlook

XAU/USD is little changed for a second consecutive day, trading with modest losses at around $2,020. Technical readings in the daily chart show buyers are moving to the sidelines, as the pair can not extend gains beyond a directionless 20 Simple Moving Average (SMA). Meanwhile, the 100 SMA preserves its bullish strength at around $1,999.20. Finally, technical indicators remain below their midlines, with neutral-to-bearish slopes, suggesting Gold may extend its slump.

The 4-hour chart shows the pair has spent the last two days under selling pressure, although the bleeding seems to have stalled. The pair is recovering modestly from an intraday low of $2,019.62. Technical indicators have lost their downward momentum, with the Relative Strength Index (RSI) indicator stabilizing at around 36. At the same time, XAU/USD is hovering around a mildly bullish 100 SMA, while the 20 SMA turned marginally lower, well above the current level.

 Support levels: 2,019.60 2,011.40 1,995.35  

Resistance levels: 2,032.50 2,045.20 2,064.90