Gold Price Forecast: XAU/USD rebound eyes $1,990 and United States Employment clues

  • Gold price remains on the front foot amid improvement in risk, US Dollar’s retreat.
  • Easing fears of United States default, hopes of pause in Federal Reserve’s rate hike trajectory underpin XAU/USD demand.
  • Uncertainty about US debt ceiling bill’s passage, market’s hawkish Fed bets weigh on the Gold Price amid mixed US data.
  • US ADP Employment Change, PMI and US politics eyed for clear XAU/USD directions.

Gold Price (XAU/USD) picks up bids to refresh intraday high near $1,967 amid the early hours of Thursday’s Asian session as the US Dollar’s retreat joins hopes of the United States debt-ceiling bill’s passage through the House of Representatives. Adding strength to the XAU/USD upside could be the latest shift in the Federal Reserve (Fed) bias amid mixed data and unimpressive comments from the policymakers. Even so, the Gold buyers need validation from today's US ADP Employment Change for May, known as the early signal for Friday’s Nonfarm Payrolls (NFP), as well as from the multiple Purchasing Managers’ Indexes for the previous month.

Gold Price cheers United States debt ceiling optimism

Gold Price benefits from the receding fears of the United States default as some of the prominent US policymakers recently backed hopes of the US debt-ceiling bill’s passage through the House of Representatives during its vote at 00:30 GMT on Thursday.

Late on Wednesday, Republican leader Mitch McConnell conveyed expectations of the US debt ceiling bill passing and reaching the Senate on Thursday. The policymaker’s comments become the key for the debt-limit extension as Republicans control the House where the bill is currently discussed.

“A bill to suspend the U.S. government's $31.4 trillion debt ceiling and avert a disastrous default cleared a key procedural hurdle in the House of Representatives on Wednesday, setting the stage for a vote on the bipartisan debt deal itself,” said Reuters as the debate on the debt-ceiling bill began.

While the receding expectations of the US default underpin the Gold price upside, there are hardline Republicans like Chip Roy and Rand Paul who can delay the much-awaited announcements and can trigger the market’s risk-off mood. The same keeps the Gold buyers on their toes.

Federal Reserve hawks’ retreat, mixed US data also favor XAU/USD bulls

Apart from the hopes that the United States will be able to push back the default concerns, the recently mixed US data and comments suggesting a pause in the Federal Reserve’s (Fed) rate hike trajectory seem to also allow the Gold buyers to remain positive of late.

On Wednesday, US JOLTS Job Openings rose to 10.103M in April versus 9.375M expected and 9.745M prior whereas Chicago Purchasing Managers’ Index dropped to 40.4 for May from 48.6 prior and 47.0 market forecasts. Earlier in the week, the US consumer sentiment gauge improved but the details were unimpressive, which in turn teases the Gold buyers.

Considering the mixed data, Federal Reserve (Fed) Governor Michelle Bowman cited recovery in the residential real estate market while also adding, “The leveling out of home prices will have implications for the Fed's fight to lower inflation,” per Reuters. Before him, Cleveland Fed President Loretta Mester suggested that the Fed must go for a rate hike in June. Additionally, Fed Governor and vice chair nominee Philip Jefferson said that skipping a rate hike would allow the Fed "to see more data before making decisions about the extent of additional policy firming,” per Reuters. On the same line was Federal Reserve Bank of Philadelphia President Patrick Harker who also said on Wednesday that he is inclined to support a "skip" in interest rate hikes at the central bank's next meeting in June.

While justifying the same, Wall Street Journal’s (WSJ) Nick Timiraos signaled that Federal Open Market Committee (FOMC) is likely to hold interest rates steady in June, which in turn propel the XAU/USD price.

US data, risk catalysts are the key for Gold price

Moving on, the US House of Representatives is debating the US debt ceiling extension and will vote on it at around 00:30 GMT, which will be key to watching for clear directions of the Gold price. Should the policymakers manage to push the much-awaited bill towards the Senate voting on Thursday, they may be able to avoid the ‘disastrous’ US default, which in turn can allow the XAU/USD to remain firmer.

Additionally, early signals for Friday’s United States Nonfarm Payrolls (NFP) will decorate the calendar and hence will be crucial for the Gold Price watchers to observe. Among them, the ADP Employment Change, ISM Manufacturing PMI and S&P Global PMIs for May will be crucial to watch.

Also read: US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar?

Gold price technical analysis

Gold price justifies recovery from an 11-week-old horizontal support area, as well as an upside break of a descending trend line from early May, while bracing for the first weekly gain in three.

That said, the XAU/USD’s upside also takes clues from the Moving Average Convergence and Divergence (MACD) indicator’s bullish signals and the upbeat Relative Strength Index (RSI) line, placed at 14.

However, the RSI is quickly approaching the overbought territory and hence highlights a fortnight-long horizontal resistance zone surrounding $1,985 as the short-term key hurdle.

Following that, the 200-Simple Moving Average (SMA) level of around $1,992 and the $2,000 round figure can prod the Gold price upside before giving back control to the bulls.

On the contrary, XAU/USD pullback needs validation from the resistance-turned-support line stretched from May 03, close to $1,945 at the latest.

Even so, the previously stated horizontal support zone around $1,935-33 may challenge the Gold bears before welcoming them.

To sum up, the Gold price remains on the front foot but the road towards the north appears long and bumpy.

Gold price: Four-hour chart

Trend: Further upside expected

Additional important levels

Today last price 1966.39
Today Daily Change 7.11
Today Daily Change % 0.36%
Today daily open 1959.28
Daily SMA20 1991.79
Daily SMA50 1991.7
Daily SMA100 1936.74
Daily SMA200 1832.52
Previous Daily High 1963.56
Previous Daily Low 1932.12
Previous Weekly High 1985.3
Previous Weekly Low 1936.77
Previous Monthly High 2048.75
Previous Monthly Low 1949.83
Daily Fibonacci 38.2% 1951.55
Daily Fibonacci 61.8% 1944.13
Daily Pivot Point S1 1939.75
Daily Pivot Point S2 1920.21
Daily Pivot Point S3 1908.31
Daily Pivot Point R1 1971.19
Daily Pivot Point R2 1983.09
Daily Pivot Point R3 2002.63



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