Gold Price Forecast: XAU/USD plunges on sudden US Dollar demand

XAU/USD Current price: $4,951

• US indexes plunged amid renewed concerns about AI's potential profits.
• The strong US NFP report released on Wednesday adds to USD strength.
• XAU/USD turns negative in the near-term, but dip buying persists.

Gold prices remained lifeless throughout the first half of Thursday, but sudden US Dollar (USD) demand in the American session saw the pair plummet to $4,878.71, its lowest for the week.

Wall Street’s collapse partially explains USD strength, with all US major indexes turning deeply negative amid renewed concerns about overvalued tech shares. The real estate sector also suffered after some comments from Elon Musk about sending it into space.

Additionally, a Russian memo hints at more collaboration between the country and the US related to energy and minerals, and even the possibility of Russia returning to the USD system.

Finally, the solid United States (US) Nonfarm Payrolls (NFP) report came back to play. The upbeat figures boosted the USD temporarily, but without some additional help, the Greenback had no room to run. The latest catalyst added to the USD bullish case was triggered on Wednesday by the NFP report.

Market players are also awaiting the release of the US January Consumer Price Index (CPI). Inflation is foreseen as mixed, with expectations of steady 0.3% monthly inflation and a modest yearly downtick expected, which cannot really affect future Federal Reserve decisions.

Back to Gold, the bright metal is incapable of benefiting from the risk-averse environment; volatility around the bright metal, however, is high, with the price now trading over $70,00 above the intraday low.

XAU/USD short-term technical outlook

From a technical point of view, the 4-hour chart for XAU/USD shows the risk skewed to the downside. The 20‑period Simple Moving Average (SMA) has started to flatten after a steady climb, remaining above the slower 100‑ and 200‑period SMAs. Price sits below the 20 and 100 SMAs, providing resistance in the $5,012.12 - $5,049.90 band, while the 200 SMA offers dynamic support at $4,769.06. At the same time, technical indicators turned sharply bearish, heading south almost vertically within negative levels, reflecting mounting selling pressure.

In the daily chart, XAU/USD briefly pierced the bullish 20-day SMA before recovering above it, but remains nearby, with the SMA currently at $4,952.06. The longer moving averages are still too far below the shorter one to be relevant, while maintaining their upward slopes. Finally, the Momentum indicator is piercing its midline, while the Relative Strength Index (RSI) indicator also turned lower, currently standing at 53, both suggesting lower lows ahead.

(The technical analysis of this story was written with the help of an AI tool.)