Gold Price Forecast: XAU/USD bulls stay the course across dynamic daily support

• Gold price daily charts show the price hugging a supporting dynamic trendline.
• A break above $2,030 could encourage more buying pressure toward the target. 

The Gold price climbed above $2,028/oz after briefly dipping to $1,990/oz on Monday which leaves the bulls in charge as per price action and market structure, as illustrated below. Meanwhile, the market is also taking its cues on the fundamentals with respect to softening US data, in the main, and the sentiment surrounding the Federal Reserve. 

On Wednesday, and ahead of Friday´s Retail Sales US data, the Consumer Price Index (CPI) climbed 0.1% in March after advancing 0.4% in February, compared with a forecast of 0.2% gain in a Reuters poll. But in the 12 months through March, the core CPI gained 5.6%, after rising 5.5% on the same basis in February. That core measure strips out volatile food and energy prices and was posting a month-on-month gain of 0.4%.

Then followed the Federal Open Market Committee minutes. These revealed very little in the way of cues ahead of next month´s interest rate decision, but there was nothing to shift the focus away from a dovish narrative. The US dollar remains on a knife edge as a consequence. 

Key quotes from the FOMC minutes: 

"Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years."

"In assessing the economic outlook, participants noted that since they met in February, data on inflation, employment, and economic activity generally came in stronger than expected. They also noted, however, that the developments in the banking sector that had occurred late in the intermeeting period affected their views of the economic and policy outlook and the uncertainty surrounding that outlook."

"Participants agreed that the labor market remained very tight."

"Some participants noted that given persistently high inflation and the strength of the recent economic data, they would have considered a 50 basis point increase in the target range to have been appropriate at this meeting in the absence of the recent developments in the banking sector. However, due to the potential for banking-sector developments to tighten financial conditions and to weigh on economic activity and inflation, they judged it prudent to increase the target range by a smaller increment at this meeting."

"Members concurred that the U.S. banking system is sound and resilient. They also agreed that recent developments were likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation, but that the extent of these effects was uncertain. Members also concurred that they remained highly attentive to inflation risks."

´´The minutes have confirmed our view that the FOMC will deliver a final hike of 25 bps at the May meeting and then remain on hold for the remainder of the year.,´´ analysts at Rabobank said. ´´Today’s CPI report underlines the importance of staying the course because core inflation remains persistent at a high level,´´ the analysts added.

Meanwhile, Fed funds futures traders are pricing in 69% probability that the Fed will raise rates by an additional 25 basis points at its May 2-3 meeting, down from around 76% before the data.

All in all, this has benefitted the Gold price as traders have positioned for one more hike in May followed by 2-to-1 bets of a pause in June.

Elsewhere, analysts at ANZ Bank explained that ´´the weaker USD and returning investment flows have been holding prices. Exchange-traded funds added 13,895 troy ounces of gold to their holdings in the last trading session, bringing this year's net sales to 422,266oz, according to data compiled by Bloomberg. This was the fifth straight day of growth.´´

Gold price technical analysis

The weekly chart is bullish with the price breaking out of the geometrical pattern´s resistance. 

The daily charts show much of the same but a target near $2,045 has been identified as oper the Fibonacci measurement of the prior bear correction´s length. The Gold price is hugging a supporting dynamic trendline and a break above $2,030 could encourage more buying pressure toward the target.