Gold Price Forecast: XAU/USD set to reclaim $2,000 amid upbeat US debt-limit sentiment
|- Gold price picks up bids to pare the biggest daily loss in a week at the lowest level in fortnight.
- Mildly positive sentiment, light calendar weigh on US Dollar, allowing XAU/USD to rebound.
- US Dollar traces pullback in Treasury bond yields amid receding fears of government default on debt payment.
- Absence of major data/events allows the Gold price to recover but technical details keep bears hopeful.
Gold price (XAU/USD) renews its intraday high near $1,993 as it reverses the previous day’s losses at the lowest levels in two weeks amid early Wednesday’s cautiously optimistic markets. Adding strength to the XAU/USD rebound is the lack of major data/events, as well as the Gold price-positive headlines from China.
A meeting between US President Joe Biden and House Speaker Kevin McCarthy renewed the market’s optimism that the US policymakers will be able to avoid the “catastrophic” default. Following the less-than one-hour-long meeting, congressional leaders, said, "It is possible to get a deal by the end of the week." The optimism triggered a fall in the one-year US Credit Default Swap (CDS) spreads.
On the other hand, China’s State Planner National Development and Reform Commission of the People's Republic of China (NDRC) recently mentioned that it'll take measures to unleash consumption potential and to make continuous efforts in stabilizing and expanding manufacturing investment. It’s worth noting that China is one of the world’s largest Gold consumers and hence any positives from the Dragon Nation can favor the XAU/USD buyers.
Alternatively, upbeat US Retail Sales and Industrial Production details for April allowed the Federal Reserve (Fed) officials to remain hawkish and prod the risk-on mood. Recently among them were Federal Reserve Bank of Chicago President Austan Goolsbee and Atlanta Fed President Raphael Bostic.
Against this backdrop, S&P500 Futures print mild gains around 4,135 and defy Wall Street’s downbeat performance whereas the US 10-year and two-year Treasury bond yields print the first daily losses in four by the press time. That said, the US Dollar Index (DXY) retreats to 102.57 following Tuesday’s 0.18% intraday gain to reverse the week-start losses.
Looking forward, a light calendar may allow the Gold price to extend the latest rebound but second-tier housing data from the US can entertain the traders. Above all, headlines about the central banks and US default will be key to watch for clear XAU/USD directions.
Gold price technical analysis
Gold price portrays a corrective bounce from the lowest level in two weeks amid an oversold RSI (14) line. The recovery moves, however, appear elusive as bearish MACD signals join the metal’s clear downside break of the previous key support line stretched from mid-March and the 200-SMA.
Even if the Gold price manages to cross the key SMA and the multi-day-old previous support line, respectively near $2,005 and $2,010, a downward-sloping resistance line from May 03, close to $2,020 at the latest, will be an additional check for the XAU/USD bulls.
On the contrary, multiple bottoms around the 38.2% Fibonacci retracement level of the Gold price run-up during the March-May period, close to $1,975, may restrict short-term declines of the bullion.
In a case where the Gold price remains weak past $1,975, April’s low of around $1,950 and late March's bottom of near $1,932 may lure the XAU/USD bears.
Overall, the Gold Price remains on the bear’s radar despite the latest short-covering move targeting the support-turned-resistance line.
Gold price: Four-hour chart
Trend: Limited recovery expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.