Gold Price Forecast: XAU/USD more gains in the offing following a firm break above $1,919

Gold price is seeing a renewed uptick early Friday, although remains in a familiar range between $1,900 and $1,937. The latest leg higher in Gold price could be linked to a fresh round of United States Dollar (USD) selling amid improved risk sentiment and ahead of key US data.

United States Dollar weakens, as focus shifts to Federal Reserve

Investors are cheering a risk-friendly market environment following the recent days of global banking stress. Dominating risk flows weigh negatively on the safe-haven US Dollar, motivating the Gold price to reinforce bullish interests. The market fears around the US banking crisis eased after the Federal Reserve (Fed), the Department of the Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) announced a massive deposit of 11 banks into the Frist Republic Bank. On Wednesday, Credit Suisse was offered a lifeline of $54 billion from the Swiss National Bank (SNB).

At the moment, the US Dollar Index is losing 0.29% on the day to trade just above 104.00 while the benchmark US 10-year Treasury yields are down 0.54% so far, near 3.56%. The weakness in the US Dollar could be also attributed to dovish US Federal Reserve (Fed) expectations, especially after the European Central Bank (ECB) refrained from signaling future rate moves in statement, reiterating the importance of a data-driven approach to monetary policy moving forward. The Fed, next week, is expected to hike policy rates by 25 basis points (bps) amidst the banking woes, compared with heightened odds of a 50 bps increase a week ago.

Looking ahead, the banking sector developments will be closely followed by market participants for fresh US Dollar valuations and any impact on risk sentiment, eventually influencing Gold price. The end-of-the-week flows combined with the pre-Fed meeting repositioning could also have a significant bearing on the Gold price action.

Gold price technical analysis: Daily chart

Gold price, finally, closed Thursday above the February 3 high of $1,919, yielding the much-needed upside break.

That said, doors now open up for a fresh rally toward the year-to-date high of $1,960. However, Gold bulls will need to clear Wednesday’s high of $1,937 to accelerate the upside.

The 14-day Relative Strength Index (RSI) keeps its bullish momentum intact above the midline, justifying the ongoing advance.

On the downside, Thursday’s low at $1,908 will be put to test should the upside momentum fizzle out. The next cushion is envisioned at the $1,900 threshold, below which Tuesday’s low at $1,895 could challenge bullish commitments. Additional declines will need to crack the weekly low at $1,886.