Gold Price Forecast: XAU/USD regains $2,000 despite a better market mood

Valeria Bednarik FXStreet

XAU/USD Current price: $2,004.47

Stock markets are in better shape on Tuesday, with the US Dollar falling against most major rivals.
The focus remains on the United States March Consumer Price Index scheduled for Wednesday.
XAU/USD resumes its advance and aims to retest its recent highs of around $2,040 a troy ounce.

Gold battles to extend gains beyond the $2,000 threshold after falling to $1,981.66 on Monday. The FX board is all about broad US Dollar weakness amid the better performance of stock markets and looming US inflation figures. XAU/USD trades near a daily high of $2,007.44, as most global indexes trade in the green. In the United States, the Dow Jones Industrial Average is up 146 points to trade at its highest since early January. The Nasdaq Composite, however, is down 0.37%.

Market participants are dropping the Greenback ahead of the United States March Consumer Price Index (CPI) expected to signal core inflation ticked higher on a yearly basis. A few weeks ago such an outcome would have trigger speculation of a potentially aggressive rate hike from the Federal Reserve (Fed), although that’s not the case following the banking crisis that unfolded in mid-March in the United States. Following the collapse of two local banks, the central bank adopted a more conservative stance on monetary tightening, as draining liquidity to tame inflationary pressures has multiple undesired effects.

Meanwhile, concerns about a recession keep growing. Sluggish macroeconomic data and the unexpected OPEC+ decision to cut oil output fueled a dismal market mood, which seems to be temporarily on pause. Still, risk-averse environments hardly benefit the Greenback these days, with Gold making the most of it.

XAU/USD price short-term technical outlook

The XAU/USD pair daily chart suggests the latest decline was a mere correction and that Gold is ready to resume its advance. The pair holds well above bullish moving averages, with the 20 Simple Moving Average (SMA) providing dynamic support at around $1,973.15. At the same time, the Momentum indicator sharply bounced from around its midline, maintaining its firmly bullish slope, while the Relative Strength Index (RSI) also picked up, currently near 62.

In the near term, and according to the 4-hour chart, XAU/USD is neutral. The pair is above bullish 100 and 200 SMAs, but struggling to overcome a mildly bearish 20 SMA. At the same time, technical indicators lack directional strength and are stuck around their midlines. Bulls may have better chances if the pair overcomes $2,011.70, an immediate static resistance level.

Support levels: 1,998.20 1,987.40 1,973.15

Resistance levels: 2,011.70 2,024.90 2,035.60

View Live Chart for XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD drops to two-week low, further below 0.7000 after RBA's less hawkish rate hike

AUD/USD drifts lower for the second straight day on Tuesday, hitting a fresh two-week low during the Asian session after the Reserve Bank of Australia's (RBA) widely expected 25 bps rate hike. The decision was far from unanimous, with three members preferring to hold rates at 4.60%. This tempers expectations of further tightening, which, along with modest US Dollar strength, weighs on the currency pair.

USD/JPY fails near 159.00 amid weak USD, intervention risks

USD/JPY edges lower during Tuesday’s Asian session, reversing part of the previous day's gains to 158.00 as the US Dollar remains depressed amid hopes for Iran diplomacy and ahead of US midterm elections. Meanwhile, intervention risks support the Japanese Yen, though the uncertainty over the timing of the next BoJ rate hike caps gains. This keeps the pair confined within a familiar range and warrants caution before placing directional bets.

Gold struggles below $3,950 amid Fed hike bets, ahead of US midterm elections

Gold weakens further below $3,950 during the Asian session, reversing part of the previous day's recovery from a one-year low set last week. Data released on Monday showed that US manufacturing sector business activity expanded for the 10th straight month in October. The Institute for Supply Management's Manufacturing PMI came in higher than consensus estimates and rose to 55.5 in October from 54.5 in the previous month. This reaffirms hawkish US Federal Reserve expectations, which along with rebounding US bond yields, prompt fresh selling around the non-yielding yellow metal.

Cardano extends losses as sellers stay in control

Cardano (ADA) extends correction, trading below $0.189 on Tuesday after losing key support zone the previous day. Mixed derivatives data and cautious on-chain metrics continue to weigh on bullish sentiment, while weakening technical indicators suggest further downside risks for ADA.

What a split Congress means for the US Dollar

The United States is going to the polls on Tuesday, and much is at stake. The mid-term elections mean the renovation of roughly one-third of the Senate and all 435 of the House seats. Additionally, special elections in Florida and Ohio will be held to fill the seats vacated by US Secretary of State Marco Rubio and Vice President JD Vance.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.