Gold Price Forecast: XAU/USD dips on inflation cooling, Initial Jobless Claims surge

Gold price struggles to crack resistance around $2040, slumps after a round of US economic data showed that inflation in the United States (US) is somewhat decelerating while the labor market cools down, as unemployment claims exceeded estimates. That said, data proved to be US Dollar (USD) positive, as shown by the Gold price, printing back-to-back days of losses. The XAU/USD is trading at $2020.15, down 0.47%.

US economic data bolsters US Dollar, and sends Gold on a downswing amidst decelerating inflation, as the labor market eases

The economy in the US is deteriorating further amidst the ongoing tightening cycle by the US Federal Reserve (Fed). The US Department of Labor was busy during the day, revealing crucial data that could share clues regarding the Fed’s decision for the upcoming meeting in June. The so-called wholesale prices of the Producer Price Index (PPI), rose 2.3% YoYm below estimates of 2.4%, while the core PPI, which excludes volatile items, remained higher than the headline numbers. Figures came at 3.2% below the 3.3% foreseen by analysts.

In another data, the same US government agency reported that Initial Jobless Claims rose above estimates of 245K and reached 264K in the week ending on May 6. Continuing claims, which exclude people who had received benefits for a week or more, jumped to 1.813M, below the estimates of 1..820M.

After the data release, the XAU/USD fell from around $2040 to its daily low of $2010.80. However, buyers lifted Gold spot prices toward the current price level.

Given that the data favors Federal Reserve’s doves, the Minnesota Fed President Neil Kashkari, balanced the scale, saying that inflation is coming down. Still, it remains persistent, adding, “We will have to keep at it for an extended period,” emphasizing that he’s leaning on the hawkish spectrum.

Aside from this, the US debt ceiling narrative continues to drive market sentiment amongst investors, with US equities trading mixed. US President Joe Biden is meeting with US congress leaders on Friday after little to no progress was made on May 9. The US Treasury Secretary Janet Yellen said she’s doubtful the Biden administration could avoid a government default without US Congress agreeing on a plan.

Upcoming events

The US economic agenda will feature the US Trade of Balance, the University of Michigan Consumer Sentiment poll, and further Fed speaking.

XAU/USD Price Forecast: Technical outlook

Gold price remains above an upslope support trendline, unable to crack it, and supported by the 20-day EMA at $2009.87. For XAU/USD to resume its uptrend, buyers must reclaim the 2040 area, which could pave the way to test the weekly high of 2048.15. On the other hand, the XAU/USD would continue to trend lower, and it might test the $2000 barrier in the short term.