Gold Price Forecast: XAU/USD consolidates around $1,960, awaiting clues

XAU/USD Current price: $1,960.21

• Market players turned cautious ahead of next week's first-tier events.
• Uncertainty grows as central banks’ monetary policy decisions loom.
• XAU/USD technical picture maintains the risk skewed to the downside.

Spot gold is under mild pressure on Tuesday, trading at around the $1,960 mark. Financial markets are in cautious mode following a row of discouraging macroeconomic data and ahead of first-tier announcements next week. On the one hand, softer-than-anticipated figures dented the mood, while on the other, expectations mount ahead of central banks’ meetings next week. The United States Federal Reserve (Fed) and the European Central Bank (ECB) will decide on monetary policy, and while the first is expected to hold its ground, the second is foreseen to deliver another rate hike.

Furthermore, and ahead of the Fed’s decision, the US will publish an update on inflation. Next Tuesday, the country will release the May Consumer Price Index (CPI) anticipated to increase by 4.2% YoY. Ever since peaking at a multi-decade high in mid-2022, the CPI has been steadily easing as a response to Fed’s tightening. Yet at the same time, the labor market has remained tight, with modest signs of loosening. In fact, wage inflation remains high and fuels concerns among speculative interest.

Furthermore and as a consequence of monetary tightening, economic growth slows, as reflected by economic data. Central banks have to maintain a delicate balance to keep the economy going while taming inflation, and the bank crisis that unfolded mid-March triggered the alarms, forcing policymakers to take a dovish approach. However, if the labor market remains tight and inflation stubbornly high, the US central bank will likely resume hiking rates. The uncertainty generated by this situation is what keeps financial markets in the current cautious mode.

XAU/USD price short-term technical outlook

From a technical point of view, the risk for XAU/USD is skewed to the downside. The pair is meeting sellers around the 23.6% Fibonacci retracement of its latest daily decline at $1,966.20, while a firmly bearish 20 Simple Moving Average (SMA) accelerates its slide above the level. At the same time, technical indicators have lost their upward strength and turned flat within negative levels, reflecting the absence of buying interest.

In the near term, and according to the 4-hour chart, Gold is bearish, although another leg south is yet to be confirmed. The metal develops below bearish moving averages, with the 20 SMA acting as intraday resistance. Technical indicators, in the meantime, consolidate below their midlines, failing to provide directional clues.

 Support levels: 1,953.60 1,939.40 1,918.00

Resistance levels: 1,966.20 1,987.65 2,003.50  

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