Gold Price Forecast: XAU/USD braces for $2,050 on softer US Dollar, United States data eyed

Gold price (XAU/USD) treads water at the highest levels in 11 months, making rounds to $2,020 early Wednesday, as the bullion traders await key United States statistics for clear directions. It’s worth noting that the broad US Dollar weakness allowed the XAU/USD to refresh the multi-day high the previous day.

Gold price rallies on US Dollar weakness

Gold price marked the biggest daily jump in three weeks the previous day as it managed to cheer the US Dollar’s weakness, as well as a technical breakout of the $2,000 resistance-turned-support.

US Dollar Index (DXY) dropped to the fresh low since February 02 late Tuesday, keeping the downside bias to renew the multi-day bottom around 101.43, as softer US data joins downbeat fundamentals to weigh on the DXY and propel the XAU/USD.

On Tuesday, US Factory Orders for February came in -0.7% MoM versus -0.5% expected and downwardly revised -2.1% prior. Further, the US JOLTS Job Openings dropped to the lowest levels since May 2021 while flashing a 9.931M figure for February versus 10.4M expected and 10.563M revised prior.

That said, the risk-on mood joins news suggesting recent challenges to the US Dollar’s reserve currency status appear to weigh on the greenback and allow the Gold price to remain firmer.

Bloomberg released a news report suggesting the US Dollar’s less acceptance as a reserve currency in Russia while highlighting the greenback’s latest weakness. “Chinese Yuan has surpassed the US Dollar as the most traded currency, in monthly trading volume, for the first time in Russia in February,” said the news while also adding that the gap has continued to widen in March. In the last week, Brazil and China agreed to pause the US Dollar’s usage as an intermediary in trade transactions.

On the contrary, hawkish Federal Reserve (Fed) talks challenge the XAU/USD buyers after the previous day’s stellar run-up. Federal Reserve Bank of Cleveland leader Loretta Mester recently cited the need to hike rates above 5% and hold them there for a while.

United States data awaited for clear XAU/USD direction

While the aforementioned catalyst allows the XAU/USD to remain firmer mixed indicators suggesting the market’s risk appetite highlight today’s US ISM Services PMI and ADP Employment Change for March.

While portraying the mood, Wall Street closed with minor losses but the US Treasury bond yields remain depressed with the benchmark 10-year coupons holding lower grounds near 3.34% after falling in the last five consecutive days. It should be observed that the CME’s FedWatch Tool suggests almost even chances of the US central bank’s 0.25% rate hike in May.

Given the recently mixed concerns and the hawkish Federal Reserve (Fed) comments, upbeat figures of the scheduled United States (US) data can allow the Gold price to pare the latest gains above the $2,000 round figure.

Also read: US ADP Jobs/ISM Service PMI Preview: Slowing but still positive

Gold price technical analysis

Gold price justifies a clear upside break of two-week-old horizontal resistance, now immediate support around $2,005, by approaching the 61.8% Fibonacci Expansion (FE) of its March 10-21 moves, close to $2,050.

It’s worth noting, however, that the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator do support the XAU/USD upside. However, the Relative Strength Index (RSI) line prods the overbought territory and hence suggests limited room towards the north, which in turn highlights $2,050 as the short-term key hurdle.

In a case where the Gold price rallies beyond $2,050, the previous yearly peak of around $2,070 could gain the market’s attention.

Alternatively, a downside break of the $2,005 resistance-turned-support needs validation from the $2,000 round figure to convince intraday sellers of the Gold price.

Even so, the 100-SMA and a three-week-long horizontal support zone, respectively near $1,958 and $1,935-33, could restrict the short-term downside of the precious metal.

To sum up, the Gold price is all set for further advances but the room towards the north appears limited.

Gold price: Four-hour chart

Trend: Further upside expected