Gold Price Forecast: XAU/USD hovers around $3,200 amid tepid buying

XAU/USD Current price: $3,221.04

• Generally encouraging United States data limited USD weakness in a risk-averse environment.
• Wall Street trades mixed, with optimism about the end of a global trade war fading.
• XAU/USD aims north, but the bullish potential is limited in the near term.

Spot Gold is in a better shape in the American session on Thursday, rising beyond the $3,200 mark after falling to a five-week low of $3,120.83 during London trading hours. Fading optimism about a potential United States (US)- China trade deal brought demand for safety back to the table.

Concerns arose on news coming from Japan early in Asia, indicating the US is considering revising its trade agreement with Japan. Market talks suggest the US is asking for additional concessions on agriculture and livestock products, something Japan is unwilling to grant, risking a deadlock in negotiations.

On a positive note, encouraging US data limited the US Dollar (USD) decline. The country unveiled the April Producer Price Index (PPI), which fell by 0.5% in the month, while the annual figure came in at 2.4%, both below expectations and March levels. Also, Initial Jobless Claims for the week ended May 10 matched expectations, up by 229K.  Retail Sales were up 0.1% in April, slightly better than the 0% anticipated by market participants.  

On a negative note, Capacity Utilisation stood at 77.7% in April, slightly below the expected and previous 77.8%, while Industrial Production in the same month stayed pat vs a 0.2% advance anticipated by market players.

Meanwhile, US indexes trade mixed, with the Nasdaq Composite struggling to overcome its daily opening, the Dow Jones Industrial Average trimming part of its recent losses and the S&P 500 extending its recent advance.

Friday will bring little of relevance, with the focus on the preliminary estimate of the US Michigan Consumer Sentiment Index for May.

XAU/USD short-term technical outlook

Technically, the daily chart shows that XAU/USD trades in the green, yet also that it posted a lower low and a lower high. At the same time, the 20 Simple Moving Average (SMA) turns modestly lower around the $3,305 level, while the 100 and 200 SMAs maintain their upward slopes far below the current level. Finally, technical indicators aim higher, but remain below their previous intraday highs and within negative levels, suggesting buying is still tepid.

The near-term picture shows buyers are piling up, but still lack full conviction. The pair is currently pressuring from below a flat 20 SMA, while the longer moving averages are pretty much flat above the shorter one. Technical indicators, in the meantime, head firmly north, yet remain within negative levels.

Support levels: 3,198.30 3,173.80 3,158.40  

Resistance levels: 3,215.80 3,232.10 3,245.70