Gold Price Forecast: XAU/USD retreats from record top below $2,100, US NFP eyed

Gold price (XAU/USD) eases to around $2,055 after refreshing the all-time high to $2,080 during the early hours of Thursday‘s Asian session. The yellow metal initially cheered the US Federal Reserve’s (Fed) dovish rate hike before the fears surrounding the United States default and banking crisis prod XAU/USD bulls. Even so, the yellow metal remains on the bull’s radar with eyes on Friday’s Nonfarm Payrolls (NFP).

Gold price cheers Federal Reserve’s dovish rate hike

Gold price jumped to the highest levels on record after hearing the Federal Reserve’s (Fed) dovish interest rate hike announcements, before easing a bit of late. That said, the United States central bank matched market forecasts on Wednesday by announcing a 0.25% increase in the benchmark Fed rate, making it the highest since 2007. Fed Chairman Jerome Powell also appeared positive while ruling out fears of a banking rout. However, a dropping in the statement suggesting the need for further rate hikes gained major attention and weighed on the US Dollar despite the hawkish move by the Fed.

It’s worth noting that the upbeat US data also failed to impress the US Dollar bulls and allowed the Gold price to remain firmer. That said, US ADP Employment Change rose to 296K for April from 142K prior versus 148K market forecast. Additionally, the annual pay growth declined to 13.2% from 14.2%. Further, ISM Services PMI improved to 51.9 in April versus 51.8 market forecasts and 51.2 previous readings. It’s worth noting, however, that the S&P Global Services PMI and Composite PMI for April eased to 53.6 and 53.4 versus 53.7 and 53.5 respective priors.

Also read: Forex Today: Dollar slides as Fed delivers as expected

Banking crisis, US debt ceiling woes prod XAU/USD bulls

Given the latest banking crisis in the United States, recently fuelled by PacWest Bancorp, the market’s previous optimism backed by the Federal Reserve’s (Fed) actions eased, which in turn allows the US Dollar to take a breather and weigh on the Gold price.

Not only PacWest Bancorp but Western Alliance Bancorp is also in the line and hence the US banking sector appears in trouble moving forward. Recently, Fox News came out with the headlines suggesting that the US policymakers are in talks to announce an explicit or de facto guarantee of deposits above the $250k limit to stem the regional banking crisis now threatening a new set of mid-sized institutions developing.

Elsewhere, the comments from the White House suggesting debt limit default could cost 8.3 million job losses also weigh on the sentiment and the Gold price.

European Central Bank, United States Nonfarm Payrolls in focus

While banking and debt ceiling talks are likely to entertain the Gold traders amid a light calendar in the United States, today’s monetary policy meeting of the European Central Bank (ECB) and Friday’s US Nonfarm Payrolls (NFP) is crucial for a clear guide.

That said, the ECB needs to remain hawkish and surprise the Fed’s cautious move to exert additional downside pressure on the US Dollar, which in turn can propel the Gold price. However, a likely improvement in the US jobs report, per the early signals, may challenge the XAU/USD upside.

Also read: European Central Bank Preview: Lagarde set to lift the Euro in two out of three scenarios

Gold price technical analysis

Gold price trades successfully beyond the $2,003 resistance confluence, now immediate support comprising the 21-DMA and a two-week-old descending trend line. It’s worth noting, however, that the quote’s latest pullback from a three-month-old ascending resistance line prods the XAU/USD bulls.

In addition to the previous resistance break, the impending bullish signals from the Moving Average Convergence and Divergence (MACD) indicator and upbeat Relative Strength Index (RSI) line, placed at 14, also keep the Gold buyers hopeful.

With this, the XAU/USD appears well set to refresh the Year-To-Date (YTD) high, currently around $2,079, which in turn highlights an upward-sloping resistance line from early February, close to $2,063.

In a case where the Gold price remains firmer past $2,063, the previous monthly high of around $2,070 and the earlier all-time high marked in 2020, close to $2,075, may offer intermediate halts during the likely run-up towards $2,100.

Alternatively, a downside break of the previous resistance confluence near $2,003 isn’t an open welcome to the Gold bears as an upward-sloping support line from March 21, near $1,980, could challenge the XAU/USD sellers.

Should the Gold price stays bearish past $1,980, the 50-DMA support near $1,945 and the mid-March swing high around $1,916 can act as the last defense of the XAU/USD bulls.

Overall, the Gold price signaled bullish confirmation on the Federal Reserve (Fed) day but the upside room appears limited.

Gold Price: Daily chart

Trend: Limited upside expected