Gold Price Forecast: XAU/USD seems poised to test ascending channel hurdle, around $2,100

Gold price oscillates in a narrow band around the $2,050 region through the Asian session on Friday and remains well within striking distance of an all-time high touched the previous day. The downside seems cushioned amid concerns about the United States (US) banking sector and the Federal Reserve's (Fed) less hawkish outlook. Following the recent collapse of the First Republic Bank earlier this week, investors now fear that regional lender PacWest Bancorp could be the next potential domino to fall. This adds to worries about a full-blown banking crisis and led to another rout in shares of regional lenders on Thursday, which, in turn, continues to underpin the safe-haven XAU/USD.

Meanwhile, the US central bank, as was anticipated, raised interest rates by 25 basis points (bps) on Wednesday and outlined a more stringent, data-driven approach to hiking rates further. Adding to this, Fed Chair Jerome Powell, during the post-meeting press conference, signalled that the central bank was close to hitting the terminal rate of the current tightening cycle. Markets took this as a sign that the central bank could pause its year-long rate-hike cycle in June. This, along with concerns over the US debt ceiling, prompts fresh selling around the US Dollar (USD), which, in turn, is seen as another factor lending some support to the US Dollar-denominated Gold price, at least for the time being.

Bullish traders, however, seem reluctant to place fresh bets and prefer to wait on the sidelines ahead of the release of the closely-watched US monthly employment details, due later during the early North American session. The popularly known Nonfarm Payrolls (NFP) report is expected to show that the US economy probably added 179K jobs in April, down from 236K in the previous month. The jobless rate, meanwhile, is expected to hold steady at 3.5% during the reported month. Apart from this, investors will take cues from Average Hourly Earnings for fresh insight into the possibility of any further rise in inflationary pressures. This will influence the USD and provide fresh impetus to Gold price.

Nevertheless, the XAU/USD remains on track to register strong weekly gains of around 3%. Moreover, the aforementioned fundamental backdrop suggests that the path of least resistance for Gold price is to the upside. Hence, any meaningful corrective pullback is more likely to get bought into and remain limited.

Gold price technical outlook

From a technical perspective, the XAU/USD has been scaling higher along an upward-sloping channel since November 2022. This points to a well-established bullish trend and adds credence to the near-term positive outlook for Gold price. Hence, some follow-through strength beyond the all-time high around the $2,078 region touched on Thursday towards challenging the trend-channel resistance, currently pegged near the $2,100 round-figure mark, looks like a distinct possibility. A convincing breakthrough will be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move.

On the flip side, the overnight swing low, around the $2,030 level, protects the immediate downside ahead of the $2,020 region and the $2,012-$2,010 resistance breakpoint, now turned support. This is followed by the $2,000 psychological mark, which should be pivotal. Failure to defend the said support level might prompt technical selling and drag the Gold price back towards the $1,980-$1,970 strong horizontal support, which, if broken decisively, might shift the near-term bias in favour of bearish traders. The XAU/USD might then turn vulnerable to accelerate the fall towards the upward-sloping 50-day Simple Moving Average (SMA) currently around the $1,953 region en route to the $1,910-$1,900 confluence, comprising the 100-day SMA and the ascending channel support.