Gold Price Forecast: XAU/USD grinds north in a risk-averse environment

Valeria Bednarik FXStreet

XAU/USD Current price: $2,033.00

Market players await the release of the United States Consumer Price Index on Wednesday.
In the absence of other news, investors remain focused on the banking system's health.
XAU/USD is modestly up for a second consecutive day, additional gains on the table.

XAU/USD consolidates around $2,030 a troy ounce as risk-aversion maintains both assets under equal demand. The US Dollar appreciated against most rivals throughout the first half of the day, pausing after Wall Street's opening but overall retaining its gains. The absence of first-tier data and persistent concerns about the banking system's health undermined the mood.

On Tuesday, the United States (US) published the Federal Reserve's (Fed) Senior Loan Officer Opinion Survey, showing lenders lifted their standards while credit demand weakened. Economic uncertainty, a reduced appetite for risk, deterioration in collateral values and broader concerns about banks' funding costs and liquidity positions were among the main reasons for the tighter standards. The news revived concerns and weighed on high-yielding assets. Wall Street closed Monday in the red, maintaining the negative tone on Tuesday. Meanwhile, US Treasury yields post modest intraday gains, further supporting the US Dollar.

Speculative interest awaits US data, as the country will publish the April Consumer Price Index (CPI) on Wednesday. Inflation is expected to have increased at an annualized pace of 5%, matching March's advance, while the core figure is foreseen at 5.5%, slightly below the previous 5.6%. A Lower-than-anticipated CPI increase could revive speculation the Fed has paused and is closer to a rate cut.

XAU/USD price short-term technical outlook

The daily chart for the XAU/USD pair shows it is up for a second consecutive day, although it is still trading in the lower end of Friday's range. Overall, the risk skews to the upside as the pair develops above all its moving averages, with a flat 20 Simple Moving Average (SMA) providing dynamic support at around the 2,000 figure. At the same time, technical indicators advance modestly, extending their recoveries from around their midlines.

The 4-hour chart, on the contrary, offers a neutral stance. Gold seesaws around a directionless 20 SMA, while the longer ones also lack directional strength, although well below the current level. Meanwhile, the Relative Strength Index (RSI) indicator consolidates at 57, while the Momentum indicator advances, nearing its 100 line from below. XAU/USD could resume its advance on a clear break above the $2,040 price zone.

Support levels: 2,015.30 2,000.00 1,987.45

Resistance levels: 2,040.35 2,059.60 2,078.40

View Live Chart for XAU/USD

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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.

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