XAU/USD Weekly Forecast: Bulls return and aim for record highs

• Central banks maintained doors open for rate cuts, refrain from clarifying dates.
• Tepid United States employment-related figures put pressure on the US Dollar.
• XAU/USD turned bullish and may challenge its record high at $2,431.40.

Spot Gold price (XAU/USD) heads into the weekly close posting solid gains and changing hands at around $2,360 a troy ounce. XAU/USD struggled for direction, spending most of the week hovering between $2,300 and $2,330. The bright metal woke up on Thursday as market participants rushed to drop the US Dollar (USD) on renewed Federal Reserve (Fed) rate-cut hopes.

In the absence of relevant data, speculative interest took clues from central banks’ monetary policy announcements and United States (US) employment-related figures.

Central banks, employment and more

The Reserve Bank of Australia (RBA) met this week to decide on monetary policy, and as widely anticipated, the Board kept the Official Cash Rate (OCR) at 4.35%, a twelve-year high. Most relevantly, the Board introduced no relevant changes to the accompanying statement despite investors’ concerns about a hawkish shift. In the previous meeting, the RBA dropped the tightening bias and refrained from reinstalling it in May.

However, RBA Governor Michele Bullock repeated that policymakers are prepared to act if inflation, particularly in the services sector, stays stubbornly high.

Also, the Bank of England (BoE) unveiled its monetary policy decision and announced the benchmark interest rate would remain steady at 5.25%. Alongside the announcement, the central bank released the Monetary Policy Report, which brought some interesting surprises. Growth forecsats were revised higher, while inflation is now seen lower.

UK GDP is expected to be 0.2% in Q2, rising to 0.9% in a year’s time, then 1.2% in 2026, and 1.6% in 2027. The new projections see the annual inflation rate to be 1.9% in two years and 1.6% in three years, below the BoE’s 2% target. Governor Andrew Bailey even said rate cuts may be sharper than what markets anticipate.

In both cases, the local currencies lost value against the US Dollar, giving the latter a breath.

However, things changed on Thursday when the US released Initial Jobless Claims for the week ending May 3. In the absence of more relevant data, investors found clues in signs of a loosening labor market, as seasonally adjusted Initial Jobless Claims jumped to 231K in the week ending May 3, the highest reading since November 2023.

Market players started piling up bets on Fed rate cuts and dropped the Greenback. Despite the upbeat mood, the safe-haven metal found its way up.

Changing the focus to inflation

In the upcoming days, the focus will be on US inflation. The country will unveil the April Consumer Price Index (CPI), foreseen at 0.3% MoM, easing from the previous 0.4%, and the Producer Price Index (PPI) for the same month. Despite the Fed basing its decision on an alternative inflation measure, these readings tend to have a large impact on the USD. The US macroeconomic calendar will also include Retail Sales for the same month.

Also relevant, China will release a bunch of data next Friday, including April Retail Sales, Industrial Production and the House Price Index.

XAU/USD technical outlook

XAU/USD trimmed most of the previous two weeks’ losses and trades in the $2,360 price zone. Technically, the weekly chart puts bulls back in the driver’s seat, given that technical indicators resumed their advances after correcting extreme overbought conditions. Furthermore, a firmly bullish 20 Simple Moving Average (SMA) accelerated its advance far below the current level, while the longer moving averages also gain upward traction below the shorter one.

The bullish case is also clear in the daily chart. XAU/USD trades below a directionless 20 SMA, which provides dynamic support at around $2,035. At the same time, the 100 and 200 SMA picked up a bullish pace over $200 below the current level, suggesting the consolidative phase came to an end. Finally, the Momentum indicator crossed its midline with a vertical slope, while the Relative Strength Index (RSI) indicator advances at around  61, reflecting increased buying interest.

XAU/USD should find resistance around $2,395 at first and $2,431 afterwards. Beyond the latter, the rally could extend towards $2,450 en route to the $2,500 mark. On the other hand, support can be found around $2,330, while firmer buying interest will likely defend the downside around the $2,300 threshold.