Gold Price Forecast: Softer US Dollar underpins XAU/USD rebound, focus on US politics, employment data
- Gold Price recovers as United States Treasury bond yields, US Dollar drop.
- Mixed US data, uncertainty about debt ceiling deal’s passage through Congress favor XAU/USD rebound.
- Hawkish Federal Reserve concerns, hopes of no US default challenge the Gold buyers.
- US JOLTS Jobs Openings, House voting on measures to avoid US default eyed for clear Gold price directions.
Gold Price (XAU/USD) keeps the previous day’s corrective bounce off a short-term key support while making rounds to $1,960 amid Wednesday’s Asian session. In doing so, the precious metal portrays the market’s sluggish mood ahead of the key United States data/events as XAU/USD bears run out of steam.
Gold Price rebound takes clues from United States Dollar, Treasury bond yields
Gold Price marked the biggest daily gains in over a week the previous day as US Dollar Index (DXY) traces downbeat Treasury bond yields amid month-end positioning, as well as due to the cautious mood ahead of the key catalysts. Also exerting downside pressure on the greenback, and favoring the XAU/USD, could be the mixed US data.
US Dollar Index (DXY) grinds near its intraday low of 104.00 while keeping the previous day’s pullback from a 10-week high. That said, the US 10-year Treasury bond yields remain pressured at the lowest level in a week, around 3.68% by the press time, whereas the two-year counterpart holds lower ground near 4.45% after snapping 12-day uptrend.
It should be noted that the United States data fail to justify hawkish Federal Reserve (Fed) bets and triggered the XAU/USD rebound. However, Richmond Fed President Thomas Barkin said that he is seeing evidence that interest rate hikes are curbing demand.
Talking about the US data, the Conference Board's (CB) Consumer Confidence Index edged lower to 102.30 for May from an upwardly revised 103.70 prior marked in April (from 101.30). Additional details of the survey report mentioned that the one-year consumer inflation expectations ticked down to 6.1% in May from 6.2% in April. Further, the Dallas Fed Manufacturing Business Index for May dropped to -29.1 from -23.4 and versus -19.6 market expectations.
Elsewhere, the market’s fears that the US policymakers, led by Republicans, will turn down the agreement to tame the US default in Congress, despite looming system failure on June 05, also weigh on the US Dollar and allow the Gold Price to grind higher.
Too much to gauge for XAU/USD traders
Having witnessed a corrective bounce in the Gold price due to the aforementioned catalysts, the XAU/USD traders have a slew of data and events to watch for clear directions. Among them, China’s official NBS Manufacturing PMI and Non-Manufacturing PMI for May will be the first catalysts ahead of the US JOLTS Job Openings for April. Above all, the Senate’s voting on the measures to avoid the US default will be crucial to watch for clear Gold Price directions.
Gold Price Technical Analysis
Gold price extends recovery from an upward-sloping support line from November, as well as justifies an upside break of a three-week-old falling resistance line, now immediate support.
The XAU/USD rebound also justifies an ascending Relative Strength Index (RSI) line, placed at 14, which improves from the oversold area. However, the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator prod the Gold buyers.
As a result, the metal appears to have a limited upside scope, which in turn highlights a convergence of the 21-DMA and 50-DMA, around $1995, as the short-term key resistance.
Following that, the $2,000 may act as an extra upside filter ahead of fueling the Gold price toward April’s peak surrounding $2,050 and the all-time high near $2,080.
On the flip side, the previous support line surrounding $1,942 and the multi-day-old rising support line close to $1,937 restrict short-term Gold price downside, a break of which will direct the bears toward the $1,900 round figure.
Gold Price: Daily chart
Trend: Limited recovery expected