Gold Price Forecast: XAU/USD climbs and keeps above the 20-DMA, around $1860s

Gold spot (XAU/USD) records solid gains and stays above the 20-day moving average (DMA), which lies at $1854.50, amidst a dismal market sentiment, falling US Treasury yields, and a weaker US dollar. At $1867.22, XAU/USD eyes to re-test the March 31 swing low-turned-resistance at around $1889.91.

Gold advances boosted by a softer greenback

Risk-aversion keeps riskier assets under pressure. Global equities are recording losses, while the non-yielding metal has seen an increase in flows towards its safe-haven status, while the greenback keeps tumbling, a tailwind for Gold prices. The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, is falling 0.36%, down at 101.717.

Investors’ concerns that the US Federal Reserve would trigger a recession in favor of bringing inflation down weighed on the market mood. Additionally, China’s ongoing coronavirus crisis keeps the global economic outlook cloudy. According to the Global Times, Shanghai will allow convenience stores and drugstores to resume operations with a maximum occupancy of 50% before May 31 and 75% after June 1.

In the meantime, US Treasuries keep plunging, led by the 10-year Treasury yield, down 11 bps, sitting at 2.743%.

At the time of writing, Atlanta’s Fed President Raphael Bostic hit the wires. Bostic said he supports expeditious rate hikes to neutral but done  “with intention and without recklessness.” Further added that he does not see clear signs of a wage-price spiral.

The US economic docket featured the US S&P Global PMIs for May, which illustrated mixed results, with the Services and Composite Indexes missing expectations while the Manufacturing PMI was unchanged. Furthermore, Richmond’s Fed Manufacturing Index plunged to -14 vs. 15 foreseen, adding to the Fed regional manufacturing reports showing deceleration or contraction.

Gold Price Forecast (XAU/USD):  Technical outlook

XAU/USD remains neutral biased, despite exchanging hands above the 20 and the 200-day moving averages (DMAs), each at $1854.41 and $1839.36, respectively. The four-consecutive day rally continued, but the non-yielding metal will face substantial resistance levels around the 100-DMA and March’s 31 swing lows. If XAU/USD fails to reclaim the previously mentioned levels, Gold would aim south and re-test the 200-DMA.

Upwards, the XAU/USD’s first resistance would be the 100-DMA at 1886.84. Break above would immediately expose the March 31 swing low-turned-resistance at 1889.91, followed by the 1900 mark. On the flip side, the XAU/USD’s first support would be the 20-DMA at $1854.41, followed by the 200-DMA at $1839.36, and then the $1800 figure.