Gold Price Forecast: XAU/USD extends gains as risk aversion intensifies

Valeria Bednarik FXStreet

XAU/USD Current price: $1,963.51

Signs of a strong US labor market boosted speculation of additional rate hikes.
Uncertainty surrounding the US debt-ceiling bill undermines the mood.
XAU/USD holds on to gains, although a steeper advance is still out of the picture.

Spot Gold extended its weekly rally to $1,974.76 a troy ounce, its highest in a week. XAU/USD trades around $ 1,965, retaining gains amid broad risk aversion.

The market mood soured late on Tuesday, remaining subdued throughout Wednesday amid tepid Chinese data and uncertainty about the United States (US) debt ceiling bill. Furthermore, the US published the April JOLTS Job Openings report, which increased to 10.1 million, indicating the job market remains strong, despite the aggressive US Federal Reserve (Fed) stance. As an immediate result, market participants rushed to price in a 71% chance of a 25 basis points (bps) rate hike in the upcoming June monetary policy meeting.

The US Dollar soared against most major rivals as stock markets turned red. XAU/USD retreated from the aforementioned high amid resurgent demand for the Greenback, although due to Gold's safe-haven condition, it retains a good chunk of its intraday gains.

Meanwhile, the US debt-ceiling bill passed the House Rules Committee by a thin 7-6 margin and moved into Congress. Senate Majority Leader Chuck Schumer noted that he would bring it to the floor once it reaches the Senate as soon as possible.

XAU/USD price short-term technical outlook

XAU/USD is up for a fourth consecutive day, but gains remain modest. The daily chart shows the pair trades mid-way between a flat 100 Simple Moving Average (SMA), providing support at around $1,937.35, and a bearish 20 SMA, currently at around $1,988. Technical indicators, in the meantime, remain within negative levels, grinding north with limited upward strength.

In the near term, and according to the 4-hour chart, the bullish potential remains limited. XAU/USD trades below bearish 100 and 200 SMAs, although the 20 SMA advances below the current level. Finally, technical indicators remain above their midlines but have turned south, reflecting the absence of sustained buying interest.

Support levels: 1,953.60 1,944.40 1,935.30

Resistance levels: 1,974.90 1,988.20 2,003.50

View Live Chart for XAU/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms

The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.

Gold down but not out as focus shifts to more US data

Gold is back in the red near $5,050 early Thursday, having faced strong offers at around the $5,100 mark once again. Buyers keep a close eye on the mid-tier US Jobless Claims data and US-Iran geopolitical developments to regain control.

UK GDP set to post weak growth as markets rise bets on March rate cut

Markets will be watching closely on Thursday, when the United Kingdom’s Office for National Statistics will release the advance estimate of Q4 Gross Domestic Product. If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.