Gold Price Forecast: XAU/USD bears approach $2,000 amid US default fears ahead of Retail Sales

Gold price (XAU/USD) refreshes intraday low near $2005.00 as it takes offers to reverse the week-start corrective bounce heading into Tuesday’s European session. In doing so, the bright metal bears the burden of the markets’ cautious mood ahead of the US Retail Sales for April and the all-important US debt ceiling talks, scheduled for 19:00 GMT.

It’s worth noting that the US Dollar Index (DXY) picks up bids to refresh its intraday high near 102.50, following the downbeat Monday, as it cheers the market’s fears of the US default and anxiety ahead of the key US data. It’s worth noting that the latest comments from US House Speaker McCarthy saying, “I don’t think we’re in a good place,” seem to put a floor under the US Dollar price, via fears of deadlock on the US debt ceiling extension as Republicans may stick to their demand.

Apart from the US Dollar moves, the downbeat data from China, one of the key customers of Gold, also weigh on the XAU/USD. That said, China's Industrial Production grew 5.9% for April versus 10.9% expected and 3.9% prior whereas the Retail Sales rose 18.4% YoY from 10.6% prior and 21.0% market forecasts.

Elsewhere, the Fed policymakers’ hesitance in letting go of the hawkish bias joins the fears of recession and banking woes to roil the risk profile and exert downside pressure on the Gold price.

Amid these plays, S&P 500 Futures dropped 0.30% intraday even as Wall Street closed positive and the yields remain pressured, which in turn shows the market’s indecision and awaits the important data/events for clear directions.

Moving on, the Gold price is likely to remain pressured amid the market’s risk-off mood ahead of the US Retail Sales for April, expected at 0.7% MoM versus -0.6% prior. Following that, the talks between US President Biden and House Speaker McCarthy to avoid debt expiration will be crucial to watch as the deadline for US default looms, recently brought forward to the first week of June.

Gold price technical analysis

Gold price reverses from a convergence of the 100-bar and 200-bar Exponential Moving Averages (EMAs), around $2,019 by the press time.

The XAU/USD pullback, however, fails to gain support from the RSI (14) line as it drops below the 50.0 level and suggests bottom-picking.

The same highlights a one-week-old horizontal support zone around the $2,000 round figure for the Gold sellers to watch as an immediate rest-points.

Even if the XAU/USD breaks the $2,000 support, despite nearly oversold RSI, an upward-sloping support line from April 27, close to $1,995 at the latest, will be the last defense of the buyers.

On the contrary, an upside break of the $2,019 EMA confluence isn’t an open ticket to the Gold price upside as a downward-sloping trend line from May 03, close to $2,023 as we write, could challenge the bulls before giving them control.

Gold price: Hourly chart

Trend: Limited downside expected