Gold Weekly Forecast: XAU/USD snaps three-week winning streak, looks to test $1,760

  • Gold turns south as US T-bond yields gain traction.
  • Upbeat US data helps USD gather strength in the second half of the week.
  • Initial support for gold aligns at $1,760 ahead of $1,740.


The XAU/USD pair failed to break above $1,800 in the previous week and opened in a calm manner on Monday as investors stayed on the sidelines ahead of key macroeconomic events of the week. After fluctuating in a relatively tight range around $1,780, the pair lost its traction on Thursday and dropped to its lowest level in two weeks at $1,756. With the US preserving its strength ahead of the weekend, XAU/USD struggled to stage a convincing rebound and closed the week in the negative territory below $1,770.


What happened last week

The US Census Bureau reported on Monday that Durable Goods Orders rose by 0.5% in March following February’s contraction of 0.9%. Although this reading came in worse than the analysts’ estimate for an increase of 2.5%, it could not trigger a noticeable market reaction.

The monthly data published by the US Conference Board revealed on Tuesday that the Consumer Confidence Index improved to 121.7 in April from 113 in March. Underlying details of the publication showed that the One-year Consumer Inflation Rate Expectations stayed unchanged at 6.7%.  

The greenback struggled to find demand but the modest increase seen in the US Treasury bond yields didn’t allow XAU/USD to gain traction. 

Following its two-day meeting, the FOMC announced on Wednesday that it left its policy setting unchanged, keeping the target range for federal funds steady at 0%-0.25%. “The Fed will continue to increase bond purchases by at least $80 billion/month of treasuries and $40 billion/month of MBS until substantial further progress made on maximum employment and price stability goals,” the Fed reiterated. On a positive note, the FOMC adopted a more optimistic tone with regards to economic outlook and acknowledged that the sectors most adversely affected by the pandemic remain weak but have shown improvement.

Despite the upbeat outlook, FOMC Chairman Jerome Powell refrained from commenting on the possible timing of tapering and continued to downplay inflation concerns. "It seems unlikely that we would see a persistent rise in inflation while there is still significant slack in the labor market,” Powell said. 

On Thursday, the first estimate from the US Bureau of Economic Analysis (BEA)  showed the Real Gross Domestic Product (GDP) expanded at an annual rate of 6.4% in the first quarter of 2021, compared to the market expectation of 6.1%. Additionally, the weekly Initial Jobless Claims declined to 553,000 from 566,000. Supported by these strong figures, the benchmark 10-year US T-Bond yields shot higher and rose more than 4% intraday, weighing heavily on gold. 

Finally, the BEA said on Friday that the Core Personal Consumption Expenditures (PCE) Price Index climbed to 1.8% on a yearly basis in March, as expected. Furthermore, the University of Michigan’s Consumer Sentiment Index improved to 88.3 (final) in April from 84.9 in March.

Next week

The ISM Manufacturing PMI report from the US on Monday will be looked upon for fresh impetus. However, it shouldn’t be a surprise if this data shows ongoing expansion in the business activity at this point. Nevertheless, market participants are likely to look for fresh clues regarding price pressures. The IHS Markit’s latest PMI surveys underlined that producers were having a difficult time finding low-wage workers and were starting to pass price increases to clients amid supply constraints. 

On Wednesday, the ISM Services PMI, the ADP Employment Change and the weekly Initial Jobless Claims data will be featured in the US economic docket.

The US Bureau of Labor Statistics will release the April Nonfarm Payrolls (NFP) figures on Friday. Investors expect the NFP to increase by 925,000. The wage inflation, as measured by the Average Hourly Earnings, will be a key detail in the US jobs report.

The US T-bond yields’ reaction to changing inflation expectations is likely to continue to impact XAU/USD’s action. 1.75% aligns as a significant resistance for the 10-year US T-bond yield and a move beyond that level could trigger a sharp decline in gold prices. On the other hand, XAU/USD could target $1,800, once again, in case yields turn south.

Gold Economic Calendar

Gold technical outlook

On the daily chart, the Relative Strength Index (RSI) indicator retreated to 50, suggesting that buyers are having a tough time staying in control of the price. Moreover, XAU/USD closed the last two trading days of the week below the ascending trend line coming from March 31.

Gold Daily Chart

On the downside, the initial support is located at $1,760 (20-day SMA) ahead of $1,740 (50-day SMA/Fibonacci 23.6% retracement of the January-March downtrend). A daily close below the latter could open the door for additional losses toward $1,720 (static level).

The initial resistance aligns at $1,785 (Fibonacci 38.2% retracement) ahead of $1,800 (psychological level/100-day SMA(ascending line) and $1,820 (Fibonacci 50% retracement).

Gold sentiment poll

The FXStreet Forecast Poll also reflects a bearish shift in gold’s outlook. Currently, the one-month view points to an average target of $1,790, compared to $1,802 last week. The one-week view paints a mixed picture with an average target of $1,774.

Gold Sentiment Poll

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD stays defensive below 1.0700 ahead of EU inflation data

EUR/USD stays defensive below 1.0700 ahead of EU inflation data

EUR/USD is trading on the back foot below 1.0700, extending its sideways movement in early Europe. The US debt deal wins the House passage. Traders refrain from placing fresh bets on the pair ahead of the EU inflation data and the US jobs data. 


GBP/USD eases below 1.2450 amid a steady US Dollar, ADP eyed

GBP/USD eases below 1.2450 amid a steady US Dollar, ADP eyed

GBP/USD is retreating from 1.2450 in the European morning, as the US Dollar looks to stabilize following the recent sell-off. Markets digest renewed dovish Fed expectations and US debt deal passage ahead of the top-tier US ADP jobs and ISM Manufacturing PMI data. 


Gold: $1,970, looming US employment clues prod XAU/USD bulls

Gold: $1,970, looming US employment clues prod XAU/USD bulls

Gold price teases bears after keeping the buyers hopeful in the last two days, retreating from the weekly top of late. In doing so, the yellow metal justifies the market’s dicey conditions.

Gold News

Bitcoin likely to remain in red through the next quarter if history is any indication

Bitcoin likely to remain in red through the next quarter if history is any indication

Bitcoin (BTC) price produced a monthly close at $27,210, noting a -6.92% return for May. The last-minute slide in BTC put an end to the four-month bullish streak that kickstarted the 2023 rally. 

Read more

US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar? Premium

US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar?

With or without the debt-ceiling crisis, the US Dollar is on the rise – but every trend has a countertrend, and a double-feature release creates opportunities. Ahead of Friday's Nonfarm Payrolls (NFP), Thursday's release of two critical leading indicators is set to rock markets.  

Read more