Gold Price Forecast: XAU/USD forms a double-bottom near $1677-76 region, March lows

• A combination of factors assisted gold to stage a goodish rebound on Wednesday.
• A softer tone around the US bond yields/equity markets extended some support.
• The upbeat US economic outlook underpinned the USD and might cap the upside.

Gold survived the first test of YTD lows touched on March 8 and staged a goodish rebound on Wednesday, snapping two days of the losing streak. The yield on the benchmark 10-year US government bond remained below 14-month tops, or levels beyond the 1.75% threshold touched in the previous session and prompted traders to take some profits off their US dollar bullish positions. This, in turn, was seen as a key factor that extended some support to the non-yielding yellow metal. Apart from this, a cautious mood around the equity markets further benefitted the safe-haven XAU/USD.

The combination of factors pushed the precious metal back above the $1,700 mark, though the recovery lacked any strong bullish conviction. Investors remained hopeful about the prospects for a relatively faster US economic recovery amid the impressive pace of coronavirus vaccinations and US President Joe Biden's spending plan. The optimism helped limit the intraday USD losses and kept a lid on any further gains for the dollar-denominated commodity. In fact, Biden announced the opening of the US COVID-19 vaccine program for 90% of American adults by April 19.

Meanwhile, the Democratic president unveiled a more than $2 trillion infrastructure package on Wednesday to bolster the post-pandemic economic recovery. The market reaction, however, turned out to be muted and the announcement did little to provide any meaningful impetus to the commodity. Nevertheless, the XAU/USD settled with gains of over 1%, still down almost 10% for the quarter. That said, a softer tone around the US bond yields continued lending some support and assisted the XAU/USD to edge higher for the second consecutive session on Thursday.

Market participants now look forward to the US economic docket, highlighting the release of ISM Manufacturing PMI for some impetus. The key focus, however, will remain on Friday's release of the closely-watched US monthly jobs report – popularly known as NFP. This, along with the broader market risk sentiment, the US bond yields and the USD price dynamics will play a key role in determining the next leg of a directional move for the precious metal.

Short-term technical outlook

From a technical perspective, the commodity could be in the process of forming a bullish double-bottom near the $1,677-76 region. The pattern, however, will be confirmed once the metal breakthrough a previous strong support breakpoint, now turned resistance near the $1,760-65 region. In the meantime, the $1,720 region might act as an immediate hurdle, above which a fresh bout of short-covering has the potential to lift the XAU/USD further towards the $1,742-44 supply zone.

On the flip side, sustained weakness back below the $1,700 mark might turn the precious metal vulnerable to retest the $1677-76 strong support. Some follow-through selling will negate the bullish set-up and pave the way for an extension of the recent downward trajectory. Bears might then aim to test the next relevant support near the $1625 level before eventually dragging the commodity further towards the $1600 round-figure mark.