Gold Price Forecast: XAU/USD grinds past $2,000 as softer United States data drown yields

• Gold price remains sidelined after refreshing multi-month high, mildly offered of late.
• United States data keeps weighing on US Treasury bond yields and allowing XAU/USD to stay firmer.
• Threats to greenback’s reserve currency status, downbeat yields prod USD and favor the Gold buyers.
• Second-tier US data eyed ahead of the all-important Nonfarm Payrolls (NFP).

Gold price (XAU/USD) prints mild losses around $2,020 during early Thursday, after rising to the highest levels since March 2022 the previous day. The precious metal’s previous run-up could be linked to the broad US Dollar weakness amid downbeat United States data and receding hawkish bets on the Federal Reserve’s (Fed) next move, not to forget downbeat US Treasury bond yields. However, the recession woes seemed to have underpinned the Gold price recovery amid mixed clues.

Gold price rose on softer United States Treasury yields, US Dollar rebound prod bulls

Gold price remains firmer despite the latest retreat as the softer United States statistics weigh on the US Treasury bond yields and the US Dollar. That said, US Dollar Index (DXY) fades the previous day’s bounce off a two-month low as it retreats to 101.82 by the press time.

Among the key negatives for the bond coupons and the greenback, which in turn propel the Gold price, are the employment numbers, as well as the latest activity data.

After a disappointing 19-month low of the US JOLTS Job Openings for February, the ADP Employment Change for March dropped to 145K from 200K expected and an upwardly revised prior of 261K. On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.

It should be noted that the CME’s FedWatch Tool suggests a nearly 57.0% of chance that the US central bank will pause its rate hike trajectory in May, which in turn prod the US Dollar buyers and weigh on the Gold price.

Against this backdrop, S&P 500 Futures print mild losses while tracing the Wall Street benchmarks. However, the yields remain pressured and weigh on the US Dollar. It’s worth noting that the benchmark US 10-year Treasury bond yields dropped in the last five consecutive days to refresh a seven-month low on Wednesday while the two-year counterpart also printed a four-day downtrend before bouncing off 3.79% at the latest.

Hence, multiple catalysts suggest further run-up of the Gold price even as the quote retreats of late.

Other challenges to US Dollar also propel XAU/USD

Apart from the data-linked weakness in the US Dollar and Treasury bond yields that propel the Gold price, the challenges to the US Dollar’s reserve currency status also allow the XAU/USD to remain firmer.

That said, Russia’s latest likes for the Chinese Yuan and the China-Brazil pact to ignore the US Dollar as an intermediate currency are key news that recently challenges the greenback’s imperial status.

On the same line are the chatters that some of the US Congressmen have proposed a Gold Standard Restoration Act to defend the US Dollar. The bill suggests re-pegging the greenback with a fixed amount of the Gold’s weight, like it was before 1971.

Geopolitical concerns fail to weigh on Gold price

While the aforementioned catalysts allow the Gold price to remain firmer, geopolitical chatters surrounding Russia, China, the US and Taiwan should have weighed on the XAU/USD price. However, the yellow metal ignores the challenges to sentiment amid the US Dollar’s failure to recover and the market’s less attention on these issues amid downbeat United States data and easing hawkish Fed bets.

Recently, US House of Representatives Speaker Kevin McCarthy crossed wires, via Reuters, late Wednesday while praising talks with Taiwanese President Tsai Ing-Wen. The Diplomat, however, ruled out chatters of his visit to the Asian nation by saying, “I don't have any current plans to visit Taiwan but that doesn't mean I will not go.”

Soon after the comments from US House Speaker McCarthy, China’s Foreign Ministry Spokesperson crossed wires and alleged the US of breaking its commitment on the Taiwan issue.

Second-tier US statics eyed before Nonfarm Payrolls

As most of the stated factors do suggest further upside of the Gold price, the second-tier United States statistics may entertain the commodity traders ahead of Friday’s key jobs report for March. Among them, the US Weekly Initial Jobless Claims may gain major attention as recently downbeat employment statistics from the United States triggered recession woes and weighed on the Gold price.

Gold price technical analysis

Gold price rides along the lines of an upward-sloping resistance line from late January, which is around $2,030 by the press time.

In doing so, the XAU/USD justifies the pennant breakout, as well as the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator. However, the overbought conditions of the Relative Strength Index (RSI) line, placed at 14, prod the Gold buyers from time to time.

As a result, the yellow metal is well-set for refreshing the Year-To-Date high but is likely to rise gradually.

Even if the XAU/USD crosses the $2,030 hurdle, the year 2022 peak of $2,070 and the all-time high marked in 2020 around $2,075 can act as extra filters towards the north.

Meanwhile, Gold price pullback remains elusive until the quote stays beyond the stated pennant’s top line, close to $1,990 at the latest. That said, the $2,000 round figure may offer immediate support to the prices.

In a case where the Gold price drops below $1,990, the pennant’s bottom line of around $1,970 and February’s peak of $1,960 may become the last defenses of the XAU/USD bulls.

Gold price: Daily chart

Trend: Further upside expected