Gold Price Forecast: XAU/USD remains firmer past $1,950 on USD pullback

• Gold prices have surpassed $1,950.00 despite rising odds of a 50 bps interest rate hike.
• The precious metal is underpinned after investors prefer bullions as an inflation hedge.
• US Initial Jobless Claims and Markit PMI Composite post robust figures on Thursday.

Update: Gold (XAU/USD) prints three-day uptrend around $1,961 during Friday’s mid-Asian session.

The yellow metal rose to the fresh high in nearly two weeks the previous day as firmer equities joined headlines over Ukraine to confuse traders. Also underpinning the bullion’s latest upside are the inflation fears.

That said, the US Dollar Index (DXY) pares recent gains while snapping two-day advances during a sluggish Asian session, down 0.08% near 98.72 by the press time.

Other than the USD pullback, mildly negative S&P 500 Futures and sluggish US Treasury yields also direct market players towards gold.

However, hawkish Fedspeak and challenges to market sentiment, not to forget covid woes, may test the gold buyers during a light calendar on Friday.

End of update.

Gold (XAU/USD) has extended its gains after overstepping the round level resistance of $1,950.00 as investors have underpinned the precious metal on a hawkish stance of US President Joe Biden in NATO meeting on Thursday. Also, the market participants parked their funds in precious metal counter on inflationary pressures.

Uncertainty surrounding the Ukraine crisis escalated on Thursday when Russia’s invasion of Ukraine completed its first month. The aggressive approach adopted by the Western leaders in Brussels to establish four new battle groups in Slovakia, Romania, Bulgaria, and Hungary, which may strengthen their collective defense, particularly on the Eastern flank looks to hold their grip on Russia. This has escalated geopolitical tensions and has underpinned gold prices further.

A case of rising US Treasury yields along with gold prices reflects that investors are pouring funds into the precious metal as an inflation hedge. There is no denying the fact that inflation is skyrocketing in the world economy. Every country is coming forward with inflation mess and messages of hawkish stances on their monetary policies.

Gold prices are rising higher despite the rising odds of a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in May monetary policy. Fed policymakers have clearly mentioned that the economy is strong enough to withstand the aggressive interest rate elevation approach. Also, the outperformance of US Initial Jobless Claims and Markit PMI composite has failed to restrict the upside in the gold prices.

Gold Technical Analysis

XAU/USD has witnessed a strong upside after violating March 14 high at $1,949.80. The trendline placed more March 16 low at $1,895.15 has acted as major support for the counter.  The precious metal is auctioning above the 200-period Exponential Moving Average (EMA), which adds to the upside filters. The Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals the continuation of a bullish trend going forward.

Gold hourly chart