Gold Price Forecast: XAU/USD tests bullish impulse as United States data, debt ceiling talks loom

Gold Price (XAU/USD) prints mild losses around $2,015 as markets kick-start the key Tuesday on a cautious note. Also challenging the XAU/USD’s week-start corrective bounce are the mixed updates from the United States data and Federal Reserve (Fed) talks, not to forget unclear statements from the US policymakers ahead of the key debt ceiling talks scheduled for 19:00 GMT.

Gold price rises amid softer US Dollar, cautious optimism and China updates

Gold price licks its wounds, despite the latest retreat, after snapping a two-week uptrend in the last. In doing so, the precious metal benefits from the downbeat US Dollar and hopes for more demand from China, one of the key XAU/USD consumers. Also underpinning the Gold price upside could be the scheduling of the US debt ceiling negotiations after postponing the talks on Friday.

That said, the United States NY Empire State Manufacturing Index dropped to the lowest level since April 2020, to -31.8 for May, and joined mixed Fed talks to also weigh on the US Dollar.

Even so, the Federal Reserve (Fed) signals have been mostly upbeat as Atlanta Fed President Raphael Bostic told CNBC on Monday that there is still a long distance to go on inflation and added that they may have to "go up on rates," as reported by Reuters. On the contrary, Chicago Federal Reserve Bank President Austan Goolsbee said in an interview with CNBC on Monday that a lot of impact of rate hikes is still in the pipeline. Furthermore, Minneapolis Fed President Neel Kashkari stated that signaled that the Fed has a long way to go to get inflation to 2.0%.

Elsewhere, the People's Bank of China’s optimism also underpins the Gold price upside. That said, PBOC keeps the one-year Medium-term Lending Facility (MLF) rates unchanged at 2.75%, per the latest update. Additionally, the Chinese central bank also released its quarterly economic report stating that China's economy isn’t experiencing deflation and that economic growth is set to rebound sharply.

Furthermore, the White House announced a meeting between President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy to overcome the looming US default. Ahead of the event, the US policymakers appear somewhat optimistic about extending the debt ceiling limit before the June expiry.

Against this backdrop, Wall Street closed with mild gains and the US Treasury bond yields dribbled in a positive territory. That said, the US Dollar Index (DXY) snapped a two-day uptrend while retreating from the five-week high.

Fears of US default weigh on XAU/USD amid pre-data anxiety

While the aforementioned catalysts allowed the Gold price to remain firmer, the market’s cautious mood recently prod the XAU/USD bulls.

It’s worth noting that the pre-data anxiety ahead of the key US fiscal talks and China’s Retail Sales and Industrial Production for April, as well as the US Retail Sales for the said month, appear to weigh on the Gold price.

More importantly, the latest comments from United States House Speaker Kevin McCarthy saying, “I don’t think we’re in a good place,” also seem to weigh on the Gold price, via fears of deadlock on the US debt ceiling extension as Republicans may stick to their demand.

Moving on, crucial statistics from China and the US may entertain the Gold traders before the key US debt ceiling talks. In case the US policymakers offer a positive surprise to the markets, the odds of witnessing a rally in the Gold price can’t be ruled out.

Gold price technical analysis

Gold price prods lower line of a two-month-old bullish channel as the XAU/USD traders brace for the key United States Retail Sales and debt ceiling negotiations among the US policymakers.

Given the steady Relative Strength Index (RSI) line, placed at 14, as well as the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator, the Gold price is likely to grind lower.

However, the 200-SMA adds strength to the $2005 support, making it the key for the XAU/USD bears to break before taking control.

Even if the Gold price drops below $2005, the $2,000 round figure may act as an extra filter towards the south before directing the XAU/USD towards the mid-April swing low of around $1,970.

On the flip side, a two-week-old descending resistance line, around $2,027 by the press time, guards the short-term Gold price recovery.

Following that, the previous monthly high of near $2,048 may check the XAU/USD run-up before directing the bulls to the recently flashed record top near $2,080.

It’s worth noting that the top line of the stated bullish channel, near $2,098 at the latest, precedes the $2,100 round figure to challenge Gold buyers afterward.

Overall, the Gold price is likely to grind higher unless sustaining the $2,000 breakdown.

Gold price: Four-hour chart

Trend: Pullback expected