Gold Price Forecast: XAU/USD bears occupy driver’s seat on hawkish Fed bets, US default jitters

  • Gold Price appears well set for third consecutive weekly loss.
  • Strong United States data, hawkish Federal Reserve talks favor US Dollar, weighs on XAU/USD.
  • Escalating fears of US debt ceiling expiration also favor Gold bears as policymakers struggle for a deal.
  • Multiple US statistics lined up to direct intraday Gold Price, risk catalysts are the key.

Gold Price (XAU/USD) remains on the back foot at the two-month low surrounding $1,941 amid early Friday morning in Asia and remains pressured around the lowest levels since late March after falling in the last two consecutive days. The yellow metal’s weakness could be linked to the market’s risk-off mood and upbeat United States data ahead of a slew of the US statistics, which in turn favor the US Dollar's strength.

Gold Price drops as firmer US data, risk-aversion underpins US Dollar, yields

Gold Price witnesses heavy downside pressure as it braces for the third consecutive weekly loss amid broadly firmer United States statistics and fears of the US default. In doing so, the XAU/USD justifies firmer US Dollar and Treasury bond yields.

Talking about the United States statistics, the second estimation of the US Annualized Gross Domestic Product (GDP) for Q1 2023 was revised up to 1.3% versus 1.0% first forecasts. Further, the Chicago Fed National Activity Index for April improved to 0.07 from -0.37 prior and -0.02 market estimations. On the same line, Kansad Fed Manufacturing Activity improved to -2 for May compared to -21 previous readings and analysts’ estimations of -11. It’s worth noting that the US Pending Home Sales for April improved on YoY but eased on MoM whereas Core Personal Consumption Expenditures also rose to 5.0% during the preliminary readings versus 4.9% prior.

Following the data, Richmond Fed President Thomas Barkin said, “Fed is in a test and learn situation to determine how slowing demand lowers inflation.” On the different front, Boston Federal Reserve President Susan Collins said on Thursday that the Fed "may be at or near" the time to pause interest rate increases, as reported by Reuters.

Given the firmer US data and mostly hawkish Federal Reserve (Fed) comments, the US Dollar and Treasury bond yields grind higher, which in turn weighs on the Gold Price ahead of a slew of the US statistics relating to the activity and inflation.

Apart from the US data and Fed talks, the concerns about USpolicymakers’ inability to clinch a deal on the US debt ceiling extension, as well as the latest chatters suggesting a $70.0 gap left to be filled by the negotiators to get the much-awaited deal also weigh on the XAU/USD prices, via the firmer US Dollar and yields.

That said, the US Dollar Index (DXY) rose to the highest levels in 10 weeks, to 104.20 at the latest, whereas the US 10-year and two-year Treasury bond yields rose to the early March highs of around 3.82% and 4.54% in that order.

Moving on, the Gold price remains vulnerable to the further downside amid the market’s rush for the haven demand and hawkish Federal Reserve bets, backed by upbeat US data and US debt ceiling talks. Talking about the data, US Durable Goods Orders for April and the Core Personal Consumption Expenditure (PCE) Price Index for the said month, known as the Fed’s preferred inflation gauge, will also be important to watch for clear directions. Above all, risk catalysts are the key.

Gold Price technical analysis

Gold price prods two-month low on breaking the key support line stretched from early April, now immediate resistance around $1,956.

Adding strength to the XAU/USD downside bias are the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator and the metal’s sustained trading below the 50-SMA, as well as the monthly resistance line, currently joining around $1,975.

It’s worth noting, however, that the oversold conditions of the Relative Strength Index (RSI) line, placed at 14, allow the Gold price to rebound from the 61.8% Fibonacci retracement of its February-May upside, near $1,909.

Following that, the mid-March swing low of near $1,85 can act as the last defense of the Gold buyers.

On the contrary, the aforementioned resistances around $19,56 and $1,975 may prod the XAU/USD bulls before giving them control.

Even so, the 200-SMA near the $2,000 psychological magnet and the previous monthly high surrounding $2,050 can challenge the upside momentum of the Gold price before directing it to the record high of $2,080.

Overall, the Gold price is likely to drop further but the road towards the south appears bumpy.

Gold Price: Four-hour chart

Trend: Further downside expected 

Additional important levels

Today last price 1941.37
Today Daily Change -15.74
Today Daily Change % -0.80%
Today daily open 1957.11
Daily SMA20 2001.08
Daily SMA50 1992.02
Daily SMA100 1933.1
Daily SMA200 1828.59
Previous Daily High 1985.3
Previous Daily Low 1956.79
Previous Weekly High 2022.18
Previous Weekly Low 1952.01
Previous Monthly High 2048.75
Previous Monthly Low 1949.83
Daily Fibonacci 38.2% 1967.68
Daily Fibonacci 61.8% 1974.41
Daily Pivot Point S1 1947.5
Daily Pivot Point S2 1937.89
Daily Pivot Point S3 1918.99
Daily Pivot Point R1 1976.01
Daily Pivot Point R2 1994.91
Daily Pivot Point R3 2004.52



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 clings to small daily gains above 1.0700

EUR/USD clings to small daily gains above 1.0700

EUR/USD has lost its traction after having climbed toward 1.0750 earlier in the day but managed to stabilize above 1.0700. Mixed performance of Wall Street's main indexes following the consumer confidence data helps the US Dollar hold its ground and caps the pair's upside.


GBP/USD retreats below 1.2400 as US Dollar rebounds

GBP/USD retreats below 1.2400 as US Dollar rebounds

GBP/USD has retraced a small portion of its daily rally and declined below 1.2400 in the American session on Tuesday. Following a bullish start to the day, major equity indexes lost traction and helped the US Dollar stage a rebound while weighing on the pair.


Gold: XAU/USD retakes $1,950 as investors hesitate Premium

Gold: XAU/USD retakes $1,950 as investors hesitate

Gold price has posted a nice comeback after bottoming for the day at $1,932 a troy ounce, now trading near a daily high of $1,963.48.

Gold News

Bitcoin whales could prevent BTC price first monthly loss of 2023 through this move

Bitcoin whales could prevent BTC price first monthly loss of 2023 through this move

Bitcoin price is inching towards the first monthly loss of 2023. At press time, BTC price is 4.4% below $29,233, its price on May 1. If BTC fails to regain lost ground, the asset is in for its first monthly loss of the year.

Read more

Tesla Stock News: TSLA breaks above $200 as Elon Musk visits China

Tesla Stock News: TSLA breaks above $200 as Elon Musk visits China

Tesla (TSLA) stock has overcome a major psychological barrier to start the week with shares overcoming the $200 level early Tuesday. A number of tailwinds are aiding the growth stock, which has gained 4.4% to $201.67 in the premarket.

Read more