Gold Price Forecast: XAU/USD pressuring the upper end of its weekly range

XAU/USD Current price: $2,354.55

• United States data came in mixed, but signs of persistent price pressures took centre stage.
• The Bank of Canada trimmed interest rates by 25 bps, focus shifts to ECB decision on Thursday.
• XAU/USD recovered the $2,350 level but seems unable to extend gains beyond its latest range.

XAU/USD trades at the upper end of its weekly range, just above the $2,350 mark, following the release of mixed United States (US) figures. On the one hand, the country reported that the private sector added 152K new positions, according to the May ADP survey. The figure missed expectations, a tepid sign of a cooling labor market. Additionally, the ISM Services PMI improved more than expected in May, jumping to 53.8 from 49.4 in April.

However, the same report showed a slight decrease in the Price Paid subcomponent, confirmed at 58.1, a sign of continued price pressures. Finally, the Employment Index recovered from 45.9 to 47.1, indicating a strengthening labor market. The US Dollar appreciated against high-yielding rivals but shed ground against the bright metal with the news. On a positive note, Wall Street maintains a positive tone, with the three major indexes posting gains after the dust settled. The market reaction to the latest news indicates that investors are uncertain about what the Federal Reserve (Fed) may decide on monetary policy in the upcoming June meeting.

Meanwhile, the Bank of Canada (BoC) trimmed the benchmark interest rate by 25 basis points (bps) as expected. Policymakers anticipated any additional decision would be made meeting by meeting. Governor Tiff Macklem later added that the economy faces a soft landing and that a restrictive monetary policy is still needed.

The focus now shifts to the European Central Bank (ECB), which is expected to announce a 25 bps cut in each of the three main rates. Financial markets have widely anticipated the movement, which has long been priced in, but there’s room for a strong market reaction.

XAU/USD short-term technical outlook

From a technical point of view, XAU/USD has a limited bullish potential, according to the daily chart. The pair keeps meeting sellers around a flat 20 Simple Moving Average (SMA), acting as dynamic resistance at around $2,360.80. The longer moving averages keep heading north far below the current level, denying the long-term bearish case. Finally, technical indicators turned higher but develop within neutral levels, not enough to confirm a bullish extension.

According to the 4-hour chart, XAU/USD retains a neutral stance in the near term. Technical indicators offer neutral-to-bearish slopes within positive levels, suggesting buyers are not interested at the current levels. At the same time, the pair is trapped within directionless moving averages, with the 100 SMA at $2,364.10 reinforcing the resistance area.

Support levels: 2,344.70 2,331.90 2,314.60

Resistance levels: 2,364.10 2,381.80 2,394.25