- The price of gold climbed higher before falling on Friday after a volatile week that reset to an all-time high.
- United States Nonfarm Payrolls, hawkish Federal Reserve bulls XAU/USD.
- Dovish Fed hikes, weaker demand for the US dollar and China keep gold buyers hopeful.
- US Bank Survey Report, Inflation Data Seeks Further Guidance.
Gold (XAU/SD) price is hovering around $2,016 on a dull Monday after posting its first daily loss in a four-week and two-week uptrend.
The precious metal’s latest corrective bounce may be linked to market inactivity during the UK holiday and mixed risk catalysts. It’s worth noting that gold sellers remain off the table due to the broad weakening of the US dollar and dovish concerns around the Federal Reserve (Fed), as well as cautious sentiment ahead of inflation and the US banking report this week.
Gold price eases on positive US data, hawkish Fed talks
Gold prices fell on Friday as upbeat US employment data renewed concerns about the hawkish Federal Reserve Bank (Fed).
However, the US employment report for April surprised markets by revealing a headline jump Non-agricultural wages (NFP) expected by 253,000 and revised downwards from the previous reading of 165,000. Furthermore, the unemployment rate also decreased to 3.4% versus 3.5% market forecasts and the previous mark, while average hourly earnings improved to 4.4% year-over-year from earlier 4.3% (revised) and analyst estimates of 4.2%.
Following an upbeat US employment report, Federal Reserve President St. Louis James Bullard, who backed the Fed’s 25 basis point rate hike last week, called it a “good next step.” The politician cited significant inflation in the economy and a “very tight” labor market to support his hawkish bias. His comments renew hope for another 0.25% Fed rate hikes in June, which in turn spurred gold buyers after the commodity recovered to an all-time high.
Dovish Federal Reserve hike, softer US dollar hampers XAU/USD bulls
Despite recent hopes in favor of a gold price cut ahead of key dates/events, dovish Federal Reserve (Fed) interest rate hikes and hopes of more trouble for the US dollar are keeping XAU/USD buyers hopeful. But US Treasury Secretary Janet Yellen issued a stark warning on Sunday that Congress’ failure to act on the debt ceiling could spark a “constitutional crisis” that would also call into question the federal government’s creditworthiness, according to Reuters. The leading European rating agency Scope Ratings placed itself on the same line United States the US long-term issuer rating of AA and the highest local and foreign currency unsecured debt rating, which according to Reuters is under review for a possible downgrade due to longer-term risks associated with the abuse of the debt ceiling tool.
Additionally, news China’s central bank adding to its gold reserve for a sixth straight month in April at 66.76 million ounces (1,893 tonnes) also supports the bullish bias for XAU/USD.
Bank Update, US Inflation Signals Looked For Clear Directions For Gold Price
Although the gold price is treading higher after resuming a record high, cautious sentiment ahead of key US dates and events is driving XAU/USD bulls. Among them, the US chief credit officer’s survey on bank lending practices and the US consumer price index (CPI) for April, which will be released on Tuesday and Wednesday, will be crucial to watch for clear directions.
Also read: Gold price weekly forecast: $2,100 on the radar, but not without risk
Technical analysis of gold price
The failure of the gold price to secure a daily close above the three-month-old ascending resistance line, around $2,068 at press time, joined the overbought conditions of the Relative Strength Index (RSI) line, located at 14, and witnessed a decline on Friday. .
However, the corrective move could neither close below the 21-DMA support at $2,005 nor reverse the bullish signals from the moving average convergence and divergence (MACD) indicator.
Thus, XAU/USD is likely to resume its upside, targeting the previous monthly high around $2,050 as an immediate obstacle. After that, the mentioned trendline resistance may attack gold buyers near $2,068, while the highs seen in 2022 and 2020 near $2,070 and $2,075 may act as additional filters to the upside before directing prices towards a final peak near $2,080.
Conversely, a daily close below the 21-DMA support of $2,005 is not an open welcome for gold sellers, as the round number of $2,000 and the upward support line from late March around $1,985 may challenge XAU/USD. disadvantage after.
It is worth noting that the 50 DMA support near $1,952 acts as a last defense for gold buyers.
Overall, the price of gold is grinding higher and may remain on the bullish radar despite the recent pullback.
Gold Price: Daily Chart
Trend: A pullback is expected