Gold Price Forecast: XAU/USD bulls target $2,043 on pennant breakout, US data holds the key

• Gold price jumps to 2023 highs above $2,000 as US Dollar extends sell-off.
• Weak United States data boosts dovish Federal Reserve bets,
• Pennant breakout on the 1D chart keeps doors open toward $2,043.

Gold price is sitting at the highest level since March 2022 near $2,025 early Wednesday, extending the previous upsurge amid continued weakness in the United States Dollar across the board. All eyes now remain on the top-tier US economic data and the speeches from the US Federal Reserve (Fed) policymakers for fresh trading impetus.

United States ADP jobs and ISM Services PMI data in the spotlight

With the United States economic data emerging back as the market movers, Gold traders eagerly await the Automatic Data Processing (ADP)  Employment Change and ISM Services PMI data for fresh hints on the next Federal Reserve interest rate move. The ADP private sector employment data is expected to show on Wednesday that the United States economy may have added 200K jobs in March, compared with 242K jobs growth seen in February. Meanwhile, the headline ISM Services PMI is set to ease to 54.5 in March vs. February’s 55.1. The ISM Services  Employment Index, New Orders Index and the Price Paid gauge are also expected to drop in the reported month. Disappointing US economic data will exacerbate the pain in the US Dollar, triggering a renewed upswing in the USD-denominated Gold price. Markets will resort to repricing the Fed rate hike expectations on the data releases, eventually impacting the US Treasury bond yields, US Dollar and the non-yielding Gold price.  

At the time of writing, the benchmark 10-year US Treasury bond yields are modestly flat on the day at 3.35% while the US Dollar Index is vulnerable near 101.50, two-month lows. Meanwhile, Asian stocks are on the back foot, as investors digest the hawkish surprise from the Reserve Bank of New Zealand (RBNZ) and resurfacing fears over a potential US recession, in the face of the recent series of downbeat United States economic data.   

United States Dollar hit by poor US data

Even though the downbeat United States JOLTS Job Openings and Factory Orders reinforced dovish Federal Reserve rate expectations, investors remained worried over the looming recession risks, given the weakening state of the US economy.

Available positions totaled 9.93 million, a drop of 632,000 from January’s downwardly revised number, the Labor Department reported Tuesday in its monthly Job Openings and Labor Turnover Survey. Job openings fell below 10 million in February for the first time in nearly two years. US Factory Orders dropped by 0.7% in February vs. -0.5% expected, registering the second straight monthly decline.

The poor run of US economic data has led markets to price in a 42% probability of 25 basis points (bps) Fed rate hike in May vs. about 58% seen before the data release. US recession fears and dovish Fed outlook jolted Gold price higher toward a yearly high at the expense of the US Dollar and the US Treasury bond yields.

Gold price technical analysis: Daily chart

Gold price validated a pennant breakout after storming through the critical rising trendline resistance, then at $1,968, and closing Tuesday well above the latter.

The 14-day Relative Strength Index (RSI) is holding firmer above the midline, sitting just beneath the overbought territory, suggesting that there is more room for the upside.

Therefore, Gold buyers need to crack the $2,030 resistance to test the pennant target measured at $2,043. The next upside barrier is envisioned at the $2,050 psychological level.

On the flip side, the immediate support is seen at the previous yearly high of $2,010, below which the critical $2,000 mark will challenge the bullish commitments.

Should the correction extend Gold sellers could aim for the pennant resistance-turned-support at $1,988.