Gold Price Forecast: XAU/USD’s fate hinges on US consumer data, technicals favor bulls

Gold consolidates within Thursday’s trading range above $1800.
A firmer US dollar, easing Treasury yields leave gold traders in limbo.
US Retail Sales and Michigan Consumer Sentiment hold the key.

Dhwani Mehta FXStreet

Gold (XAU/USD) fell to fresh weekly lows of $1809 in the first half of Thursday’s trading, as the US dollar extended the post-US inflation surge. However, the gold price rebounded sharply to test the $1830 level after the greenback retreated on upbeat US data, which boosted the overall market mood. A fresh set of US data showed that fewer Americans filed for initial jobless claims last week while producer prices accelerated in April. Despite the encouraging US fundamentals and rising price pressures, the Fed policymakers continue to downplay mounting inflation concerns, which aided the rebound in the global stocks while weighing on the US Treasury yields across the curve.

Gold prices are looking to extend Thursday’s rebound ahead of the key US Retail Sales and Michigan Preliminary Consumer Sentiment data. The US Retail Sales are likely to rise by 1% MoM in April when compared to a massive 9.7% increase reported in March. If the data bets estimates, the US dollar is likely to see a fresh leg higher amid the ongoing influence of inflation dynamics on the markets. Gold could bear the brunt of fresh dollar’s advance. Meanwhile, disappointing US data could temper the Fed’s tightening calls, boding well for the gold optimists.

Gold Price Chart - Technical outlook

Gold: Daily chart

Gold continues to range between the 200 and 100-daily moving average (DMA) for the sixth trading session this Friday.

Thursday’s rebound in gold prices has confirmed a bullish crossover on the daily sticks, especially after the upward-sloping 21-DMA cut the mildly bearish 100-DMA from below.

Meanwhile, the 14-day Relative Strength Index (RSI) has turned, although holds comfortably above the midline, suggesting that the bullish potential remains well in place.

Therefore, the price of gold could advance towards the 200-DMA at $1847 if the buying interest picks up pace.

Ahead of that the $1840 level needs to be scaled on a sustained basis.

Alternatively, the confluence of the 21 and 100-DMAs at $1795 could emerge as a strong support if Thursday’s low caves into any downside pressure.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation

We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.