Gold Price Forecast: XAU/USD pressures highs around $1,970

XAU/USD Current price: $1,966.67

• US Dollar swings alongside speculation about the next Federal Reserve decision.
• Hawkish surprises from the RBA and the BoC continue to drive sentiment.
• XAU/USD could gather additional upward strength once above the $1,970 region.

XAU/USD posted a nice comeback after bottoming at $1,939.66 a troy ounce on Thursday, a fresh weekly low. The US Dollar traded with a soft tone since the beginning of the day but turned frankly negative within American trading hours. A worse-than-expected employment-related report was the initial catalyst, as Initial Jobless Claims unexpectedly surged to 261K in the week ended June 2.

The USD accelerated its decline with Wall Street’s opening, despite the fact that the three major indexes managed to post modest gains, which they retain at the time of writing. The dismal United States figures pushed investors into lifting bets on a dovish Federal Reserve (Fed). Odds for a rate hike next week are back above 70% after declining sharply on Wednesday on the back of a hawkish surprise from the Bank of Canada (BoC). The BoC and the Reserve Bank of Australia (RBA) shocked financial markets with unexpected hikes, raising doubts about the end of the tightening cycle in the US.

The US Dollar is also being affected by the sharp retracement of government bond yields. After being on the winning side for most of the week, Treasury yields are now in retreat mode, with the 10-year note offering 3.72% and the 2-year one 4.5%.

Coming up next, China will publish May inflation figures in the Asian session, which may take their toll on the market’s sentiment. Later in the day, Canada will publish May employment figures, with no other relevant data in Friday’s docket.

XAU/USD price short-term technical outlook

XAU/USD trades around the 23.6% Fibonacci retracement of its latest daily slump at $1,966.20. The daily chart shows that buyers continue to defend the downside around a flat 100 Simple Moving Average (SMA) at around $1,941, while a bearish 20 SMA converges with the mentioned static level and caps advances. At the same time, the Momentum indicator remains directionless, just below its midline, while the Relative Strength Index (RSI) aims higher but below its 50 line, still suggesting cautious buying interest.

In the near term, and according to the 4-hour chart, the chances skew to the upside, although the pair has partially lost its upward strength. Technical indicators have turned flat after crossing their midlines into positive territory as XAU/USD consolidates near its daily high. Furthermore, Gold seems comfortable after recovering above its 20 and 100 SMAs, which slowly grind higher. The pair has met sellers around the $1,970 threshold these days, the immediate resistance level to overcome to extend its advance towards the next Fibonacci resistance, the 38.2% retracement at $1,987.65.

 Support levels: 1,954.50 1,942.50 1,932.00  

Resistance levels: 1,972.00 1,987.65  2,003.10

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