Gold Price Forecast: XAU/USD skids below $1,980 as upbeat US PMI figures strengthen hawkish Fed bets

Gold price has shifted its business below $1,980.00 after solid preliminary US PMI data.
Solid PMI numbers could force the Fed to continue to hike rates further.
Fed Kashkari cited recent stress in the banking sector could bring the US closer to recession.

Sagar Dua FXStreet

Gold price (XAU/USD) has shifted its auction below $1,980.00 in the early Asian session. The precious metal is not showing any signs of a rebound, therefore, more downside is anticipated further. Bearish bets for Gold price soared after S&P Global reported upbeat preliminary United States PMI figures (March) on Friday. Manufacturing PMI jumped to 49.3 vs. the consensus of 47.0 and the former release of 47.3. While Services PMI accelerated to 53.8 against the estimates of 50.5 and the prior release of 50.6.

A vertical jump in the overall economic activities indicates that overall demand is robust and the road ahead for pushing US inflation lower would be full of challenges for the Federal Reserve (Fed). Last week, Fed chair Jerome Powell hinted that few rates are in pipeline now to avoid a banking crisis. And now solid PMI numbers could force the Fed to continue to hike rates further.

Meanwhile, Minneapolis Fed president Neel Kashkari cited on Sunday, “Recent stress in the banking sector and the possibility of a follow-on credit crunch brings the US closer to recession. It definitely brings us closer." It would be a tough call from the Fed to bring more interest rates if recession fears are potential.

Meanwhile, the US Dollar Index (DXY) is juggling in a narrow range below 103.20 after a solid recovery. The USD Index is looking to add gains further despite potential fears of further banking turmoil. S&P500 futures settled on a positive note last week despite sheer volatility inspired by the Fed policy. The impact of dovish interest rate guidance by the Fed was witnessed in US Treasury yields. The 10-year US Treasury yields dropped to 3.37%.

Gold technical analysis

Gold price has shown a break of higher highs and higher lows structure below $1,982.70 after forming a Double Top chart pattern on an hourly scale. The chart pattern indicates a re-test of prior highs with less buying interest, which allows aggressive selling interest to penetrate. The asset has slipped below the 20-period Exponential Moving Average (EMA) at $1,985.00, which indicates that the short-term trend is bearish now.

Meanwhile, the Relative Strength Index (RSI) (14) is defending the 40.00 cushion. A break below the same would drag Gold price further as a bearish momentum will get triggered.

Gold hourly chart

XAU/USD

Overview
Today last price	1977.45
Today Daily Change	0.00
Today Daily Change %	0.00
Today daily open	1977.45

Trends
Daily SMA20	1892.66
Daily SMA50	1887.93
Daily SMA100	1840.48
Daily SMA200	1780.47

Levels
Previous Daily High	2003.07
Previous Daily Low	1975.28
Previous Weekly High	2009.88
Previous Weekly Low	1934.34
Previous Monthly High	1959.8
Previous Monthly Low	1804.76
Daily Fibonacci 38.2%	1985.9
Daily Fibonacci 61.8%	1992.45
Daily Pivot Point S1	1967.46
Daily Pivot Point S2	1957.48
Daily Pivot Point S3	1939.67
Daily Pivot Point R1	1995.25
Daily Pivot Point R2	2013.06
Daily Pivot Point R3	2023.04

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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