Gold Price Forecast: XAU/USD bulls jump on US Dollar weakness, busting out of the coil

Gold price climbed to the highest in more than a year on Tuesday, finally busting through and holding above the $2,000 mark as the US Dollar and bond yields fell. Yet more US data weighed on the greenback and consequently helped the yellow metal rally out of a coiled formation. At the time of writing, the Gold price is trading at $2,020 and is 1.8% higher. 

US job openings in February fell to the lowest level in nearly two years and there was a continued decline in factory orders. Job openings, a measure of labor demand, decreased from 632,000 to 9.9 million on the last day of February, the lowest since May 2021, according to the monthly Job Openings and Labor Turnover Survey, or JOLTS report. ´´he largest drop in openings was in professional and business services, followed by healthcare. Accommodation and food services, saw openings fall back to the middle of 2022 levels. Construction job openings picked up despite the sector’s interest rate sensitivity,´´ analysts at ANZ Bank said.

 US factory orders declined for a second straight month, down 0.7% in February after falling 2.1% in January from the 1.7% jump in December. This data comes on the heels of the Institute for Supply Management (ISM) that yesterday reported that its Manufacturing PMI fell to 46.3 last month. This was the worst since May 2020, from 47.7 in February. 

The data echoed, in part, last week’s PCE data, the Federal Reserve´s preferred inflation measure, which was mixed. However, while headline and core both came in a tick lower than expected, super core accelerated for a second straight month to 4.63% YoY which is the highest since October.  ´´This is not the direction that the Fed desires and so we look for the hawkish tilt in Fed comments to continue,´´ analysts at Brown Brothers Harriman explained. 

Meanwhile, the rate futures market priced in a roughly even chance of a 25 basis-point rate hike in May, with rest of the odds tilted towards a pause from the Fed. On Monday, the probability of a 25-bp hike was more than 65%. The money markets have also factored in Fed cuts by end-December. In late morning trading, the US Dollar index dropped to a two-month low of 101.45 DXY and was last down 0.39% at 101.64.

Gold technical analysis

As per the pre-market open weekly Gold price analysis, Gold, Chart of the Week: XAU/USD bulls remain in control, the Gold price indeed rallied:

Prior Gold price analysis

We had a bullish pennant on the daily and 4-hour charts:

Gold price updates

The Gold price bulls were back in the market after an anticipated drive from around the supporting area. The Gold price bulls needed to commit at this juncture to get and stay above $2,010.

Gold price update, live chart

The bullish pennant thesis played out as illustrated in the live chart above. 

On the following daily chart, the price has rallied through resistance, and if there is not just a continuation right off the bat into $2,050s, then the Fibonacci scale comes into play. We have the 38.2% Fibonacci retracement aligned with the $2,000 area that could come back under pressure for a retest, if not lower, prior to the next bullish impulse and an eventual upside continuation: