Gold Price Forecast: XAU/USD marches towards $1,945 key resistance as United States data loom

Gold Price (XAU/USD) stays firmer at the highest level in three weeks despite making rounds to $1,937-38 amid the early hours of Wednesday’s Asian session. In doing so, the precious metal cheers the broad US Dollar weakness ahead of the key United States (US) data. Also favoring the XAU/USD are the downbeat US Treasury bond yields and hopes of more stimulus from China. However, the recent headlines surrounding the US-China ties and the International Monetary Fund’s (IMF) cautious view about the future allocations of the Special Drawing Rights (SDRs) seem to prod the Gold buyers ahead of the second-tier US statistics.

Gold Price rises as softer United States data weigh on US Dollar, yields

Gold Price crossed the 50-day Simple Moving Average (SMA), as well as rose the most in a week, after the United States data challenged the Federal Reserve (Fed) hawks on Tuesday. Adding strength to the XAU/USD upside were concerns about more stimulus from China, one of the biggest Gold customers, as well as the downbeat US Treasury bond yields.

On Tuesday, the US Conference Board's (CB) Consumer Confidence Index slumped to 106.10 for August from a downwardly revised 114.00 prior (from 117.0), versus 116.0 market forecasts. That said, the US JOLTS Job Openings slumped to the lowest since March 2021, to 8.827M for July versus 9.465M expected and 9.165M prior (revised from 9.582). Additionally, the US Housing Price Index eased to 0.3% MoM for June from 0.7% prior and 0.2% while the S&P/Case-Shiller Home Price Indices improved to -1.2% YoY from -1.7% previous readings and -1.3% market forecasts.

It’s worth noting that the mostly downbeat US data fuelled fears of the Fed’s September policy pivot. With this, the CME’s FedWatch Tool signals 16% chance of a rate hike versus 20% prior. The same propelled Wall Street and weighed on the US Treasury bond yields, as well as the US Dollar. That said, the Wall Street benchmarks rose for the third consecutive day while the US 10-year Treasury bond yields dropped to the lowest level in 13 days by the end of Tuesday’s North American trading session. Further, the US Dollar Index (DXY) fell the most in six weeks to around 103.50 at the latest.

Elsewhere, chatters about the early rate cuts from the People’s Bank of China (PBoC) and a cut into the mortgage rates from the Dragon Nation also helped the Gold buyers to remain hopeful. However, US Commerce Secretary Gina Raimondo’s complaints about the hardships for the US firms in China prod the XAU/USD bulls. On the same line could be the International Monetary Fund’s (IMF) readiness to be more cautious while allocating the Special Drawing Rights (SDRs) in the future, due to the current environment of higher interest rates and inflation.

US employment, inflation clues will direct XAU/USD moves

Having witnessed a stellar run-up due to the downbeat US Dollar, the Gold Price may witness a consolidation ahead of the early signals of US employment and inflation. Among them, the US ADP Employment Change, the final readings of the US second quarter (Q2) Gross Domestic Product (GDP) and the Personal Consumption Expenditure (PCE) are the key to watch. Should the scheduled macro data flash downbeat signals, the hardships for the Federal Reserve (Fed) hawks will escalate, which in turn may allow the XAU/USD to cross the immediate $1,945 resistance confluence stated below.

Also read: Gold Price Forecast: XAU/USD extends rally on broad US Dollar sell-off

Gold Price Technical Analysis

Gold Price justifies the sustained trading beyond the $1,910 support confluence, as well as the upside break of the 50-day Simple Moving Average (DMA), while pleasing buyers at the highest levels in three weeks.

Adding strength to the upside bias about the XAU/USD are the bullish signals of the Moving Average Convergence and Divergence (MACD) indicator and the firmer Relative Strength Index (RSI) line, placed at 14, not overbought.

With this, the Gold Price appears all set to prod the $1,945 key resistance comprising the 50% Fibonacci retracement of February–May upside and a downward-sloping trend line from the yearly top marked in May.

However, a daily closing beyond the said $1,945 resistance will allow the Gold buyers to aim for the previous monthly high of around $1,987 before challenging the $2,000 threshold.

On the contrary, the 50-DMA level of near $1,930 restricts the immediate downside of the XAU/USD ahead of the $1,910 support confluence encompassing the 200-DMA and the 61.8% Fibonacci retracement, also known as the Golden Ratio.

Should the Gold Price remain weak past $1,910, the $1,900 round figure and the monthly low of around $1,885 will test the bears ahead of highlighting a horizontal support zone including multiple levels marked in February and early March, close to $1,858–61.

Gold Price: Daily chart

Trend: Further upside expected