Gold Price Forecast: XAU/USD gathers pace for the next push higher

Gold price is finding fresh demand, looking to revisit the two-wee high of $3,365 hit last Friday. Gold buyers await the mid-tier US economic data and trade headlines for a fresh leg higher.   

Gold price looks to resume uptrend

Gold price seems to be gathering pace to resume the uptrend toward record highs as the US Dollar (USD) remains sold off into US fiscal concerns, bracing for the Senate debate on President Donald Trump’s sweeping tax cuts and spending bill.

Last week, the US House of Representatives passed Trump’s tax bill, which is expected to “add about $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade,” according to the Congressional Budget Office.

Amidst looming concerns over the fiscal health of the world’s largest economy, investors remain wary and refrain from holding any US assets, including the Greenback. This is also considering Moody's downgrade of the US sovereign credit rating on May 16.

Moreover, the sentiment around the US Treasury bond yields remains undermined on increased dovish US Federal Reserve (Fed) expectations, capping the downside in the yieldless Gold price.

Minneapolis Fed President Neel Kashkari warned early Monday that “extended tariffs raise risk of stagflation,” adding pressure on the Fed to maintain its easing trajectory.

Apart from the reduced demand for US assets, Gold price will continue to draw support from lingering geopolitical tensions between Russia and Ukraine and Iran and the US over nuclear deal talks.

The mid-tier US Durable Goods Orders and Consumer Confidence data will likely influence the US Dollar’s performance but trade headlines and US tax debate will continue to drive Gold price action.

On Monday, Gold price pulled back from two-week highs, despite persisting US Dollar weakness, as risk sentiment improved on Trump’s backpedalling on 50% tariffs announced Friday on European Union (EU) imports from June 1, extending the deadline to July 9.

Gold price technical analysis: Daily chart

The short-term technical outlook for Gold price remains more or less the same.

Gold buyers will likely regain control as the 14-day Relative Strength Index (RSI) holds fort above the midline, near 57, having recovered some ground.

A sustained break above the $3,370-$3,375 confluence area is needed to resume the uptrend. The zone is the confluence of the falling trendline resistance and the 23.6% Fibonacci Retracement (Fibo) level of the April record rally.

The next topside targets are aligned at $3,400 (round level) and $3,435 (static resistance). 

On the downside, strong support is seen near $3,295, which is the confluence of the 21-day Simple Moving Average (SMA) and the 38.2% Fibo of the same ascent.

If the selling momentum gains traction, a test of the 50% Fibo support at $3,232 will be inevitable, below which the 50-day SMA at $3,213 will come into play.