Gold Price Forecast: XAU/USD bulls take a breather, banking updates, US inflation eyed

Gold price (XAU/SD) seesaws around $2,016 during a dull Monday, after posting the first daily loss in four and two-week uptrend.

The precious metal’s latest corrective bounce can be linked to the market’s inaction amid holidays in the UK and mixed risk catalysts. It’s worth noting that the Gold sellers remain off the table amid broad US Dollar weakness and dovish concerns surrounding the Federal Reserve (Fed), as well as a cautious mood ahead of this week’s United States inflation and bank report.

Gold price eases on upbeat United States data, hawkish Fed talks

Gold price witnessed a pullback on Friday as upbeat United States employment data renewed hawkish Federal Reserve (Fed) concerns.

That said, the US employment report for April surprised markets by unveiling a jump in the headline Nonfarm Payrolls (NFP) by 253K expected and revised down prior readings of 165K. Further, the Unemployment Rate also eased to 3.4% versus 3.5% market forecasts and previous mark whereas Average Hourly Earnings improved to 4.4% YoY from 4.3% prior (revised) and analysts’ estimations of 4.2%.

Following the upbeat US employment report, St. Louis Federal Reserve President James Bullard, who supported the 25 basis point rate hike that the Fed took last week, called it "a good next step." The policymaker cited significant amount of inflation in the economy and "very tight" labor market to back his hawkish bias. His comments renew hopes of a one more 0.25% Fed rate hike in June, which in turn prod Gold buyers after the commodity refreshed all-time high.

Federal Reserve’s dovish hike, softer US Dollar defend XAU/USD bulls

Despite the recent hopes favoring the Gold price pullback ahead of the key data/events, the dovish Federal Reserve (Fed) interest rate hike and hopes of more problems for the US Dollar keep the XAU/USD buyers hopeful. That said, the US Treasury Secretary Janet Yellen on Sunday issued a stark warning that a failure by Congress to act on the debt ceiling could trigger a "constitutional crisis" that also would call into question the federal government's creditworthiness, per Reuters. On the same line, a leading European rating agency, Scope Ratings, placed the United States of America's AA long-term issuer and senior unsecured debt ratings in local and foreign currency under review for a possible downgrade due to longer-run risks associated with the misuse of the debt ceiling instrument, per Reuters.

Additionally, news that China’s central bank added to its Gold reserve for the sixth consecutive month in April to 66.76 million ounces (1,893 tons) also underpins the bullish bias about the XAU/USD.

Banking updates, US inflation signals eyed for clear Gold price directions

Although the Gold price grinds higher after refreshing the record top, a cautious mood ahead of the key United States data and events prod the XAU/USD bulls. Among them, the US Senior Loan Officer Opinion Survey on Bank Lending Practices and the US Consumer Price Index (CPI) for April, up for publishing on Tuesday and Wednesday, will be crucial to watch for clear directions.

Also read: Gold Price Weekly Forecast: $2,100 on the radar but not risk-free

Gold price technical analysis

Gold price’s failure to provide a daily closing beyond a three-month-old ascending resistance line, around $2,068 by the press time, joined the overbought conditions of the Relative Strength Index (RSI) line, placed at 14, to witness a pullback on Friday.

The corrective move, however, could neither close below the 21-DMA support of $2,005 nor reverse the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator.

Hence, the XAU/USD is likely to resume its run-up while targeting the previous monthly high of around $2,050 as an immediate hurdle. Following that, the stated trend line resistance can challenge the Gold buyers near $2,068 whereas highs marked in 2022 and 2020 close to $2,070 and $2,075 can act as additional upside filters before fueling the prices towards the latest peak near $2,080.

On the contrary, a daily closing below the 21-DMA support of $2,005 isn’t an open welcome for the Gold sellers as the $2,000 round figure and an upward-sloping support line from late March, around $1,985, can challenge the XAU/USD downside afterward.

It’s worth noting that the 50-DMA support of near $1,952 acts as the last defense of the Gold buyers.

Overall, Gold price grinds higher and can remain on the bull’s radar despite the latest pullback.

Gold price: Daily chart

Trend: Pullback expected