Gold Price Forecast: XAU/USD bulls keep the reins ahead of United States Nonfarm Payrolls

• Gold price grinds near all-time high marked after the Federal Reserve announcements.
• Mixed United States data, European Central Bank’s hawkish play weigh on US Dollar and propel XAU/USD price.
• Fears of US banking fallouts, debt ceiling expiration also exert downside pressure on the USD and favor the Gold buyers.
• US Nonfarm Payrolls, other employment data for April can offer Gold price retreat on upbeat outcome.

Gold price (XAU/USD) remains firmer as bulls flirt with the $2,050 round figure on the key United States Nonfarm Payrolls (NFP) Friday. The precious metal’s latest run-up could be linked to the US Dollar’s failure to defend the previous day’s corrective bounce amid mixed clues surrounding the US banking and debt ceiling concerns.

Gold price rise on dovish Fed hike, mixed US data

Gold price rejoices the Federal Reserve (Fed) hints to pause the rate hike trajectory after lifting the benchmark interest rates to the highest levels since 2007. The same joins Fed Chairman Jerome Powell’s cautious remarks, by suggesting the current monetary policy is at sufficiently restrictive levels, to weigh on the US Dollar and propel the Gold price.

On the other hand, preliminary readings of the US Nonfarm Productivity and Unit Labor Cost for the first quarter (Q1) of 2023 came in mixed. That said, Nonfarm Productivity dropped to -2.7% in Q1 from 1.6% prior and -1.8% market forecasts whereas the Unit Labor Cost jumped to 6.3% versus 5.5% expected and 3.3% prior. Further, the US Goods and Services Trade Balance improved to $-64.2B from $-70.6B prior and $-63.3B market forecast. Further, Initial Jobless Claims edge higher to 242K for the week ended on April 28 versus 240K expected and 229K in previous readings.

Hence, mixed US data and dovish Fed are the key catalysts behind the latest Gold price upside even if the pre-NFP anxiety restricts immediate moves of the XAU/USD.

ECB also plays its role in fueling XAU/USD price

Apart from the Federal Reserve (Fed) and US data, the European Central Bank’s (ECB) hawkish announcements also play their roles in weighing on the US Dollar and propelling the Gold price.

On Thursday, European Central Bank (ECB) matched market forecasts by announcing a 25 basis points (bps) increase in its benchmark rates. The ECB also announced faster dialing back of its Asset Purchase Programme (APP) to around EUR25 billion per month from July, from the current pace of EUR15 billion per month. In return for a smaller rate hike, the ECB chose to remain hawkish and shut the door for rate hike pause while saying, “Inflation outlook continues to be too high for too long."

With this, the ECB moves appear more hawkish than the Fed and hence keep the US Dollar bears hopeful, which in turn propels the Gold price.

Banking turmoil, US default woes and IMF updates strengthen Gold price upside

Qualitative catalysts surrounding the US bank fallouts, debt ceiling expiration and the International Monetary Fund’s (IMF) optimism surrounding Asian growth allow the Gold price buyers to remain hopeful.

Reuters quotes Fed data suggesting that a large part of the central bank's emergency lending activities in recent weeks were tied up with the now-shuttered First Republic Bank. On the same line was the news, shared via Reuters, “Pressure is growing on US regulators to take more steps to shore up the country's banking sector as a renewed rout in regional lenders' shares forced PacWest Bancorp to explore options to bolster its balance sheet.”

However, the Western Alliance's shares’ rebound after slumping by nearly 60%, backed by its rejection of concerns suggesting that the bank is exploring strategic options, challenged the previous pessimism.

Elsewhere, US policymakers remain at loggerheads about the default concerns and hence the issue can keep trolling the traders ahead of the likely expiry in June.

On the other hand, the IMF’s optimism surrounding the growth in China and India, one of the largest XAU/USD consumers, also favors the Gold buyers.

All eyes on US employment report

Gold buyers seem running out of steam ahead of the key United States employment data for April. Forecasts suggest an easing in the headline Nonfarm Payrolls (NFP) figures to 179K versus 236K prior, which in turn can propel the Gold price on marching forecasts.

Also read: US April Nonfarm Payrolls Preview: Analyzing Gold price's reaction to NFP surprises

Gold price technical analysis

Gold price portrays a bullish megaphone chart formation on the four-hour play, suggesting a gradual run-up of the XAU/USD price.

That said, the recently overbought conditions of the Relative Strength Index (RSI) line, placed at 14, join the receding bullish bias of the Moving Average Convergence and Divergence (MACD) indicator to hint at a pullback in the Gold price.

However, one-month-old horizontal support near $2,030 restricts the immediate downside of the XAU/USD quote.

Following that, the $2,000 round figure may lure the Gold sellers before highlighting the $1,980 support confluence comprising the stated megaphone’s bottom line and the 200-bar Exponential Moving Average (EMA).

It’s worth noting, however, a sustained break of $1,980 could open doors for the Gold bear’s dominance.

On the contrary, tops marked in 2022 and 2020, near $2,070 and $2,075 may prod immediate upside of the XAU/USD.

Adding to the upside filters is the megaphone’s top line, close to $2,080 at the latest, a break of which could propel the Gold price toward the $2,100 round figure.

Gold price: Four-hour chart

Trend: Limited upside expected