Gold price attracts some dip-buying near the $2,008-$2,007 region on Thursday and stalls the previous day’s retracement slide from its highest level since March 2022. The XAU/USD is currently placed just below the $2,020 level, nearly unchanged for the day, and is influenced by a combination of diverging forces.
Gold Price Is Weighed Down By A Combination Of Factors
The US Dollar (USD) edges higher for the second successive day and recovers further from a two-month low touched on Wednesday. This, in turn, prompts some intraday selling around the US Dollar-denominated Gold price. Additionally, signs of stability in the equity markets undermine traditional safe-haven assets, including the XAU/USD. That said, rising bets for an imminent pause in the Federal Reserve’s (Fed) rate-hiking cycle caps the upside for the Greenback and helps limit the downside for the non-yielding yellow metal.
Bets That Federal Reserve Is Down With Rate Hikes Lend Support
Investors seem convinced that the Fed is nearly done with its inflation-fighting interest rate hikes. The markets are pricing in an even chance of a 25 bps lift-off at the next Federal Open Market Committee (FOMC) meeting in May and the possibility of rate cuts by year-end. The bets were reaffirmed by the disappointing release of the ADP report from the United States (US) on Wednesday, which showed that private-sector employers added 145K jobs in March compared to the 200K anticipated and the 261K previous.
Depressed US Treasury Bond Yields Further Act As A Tailwind
Furthermore, the ISM Services PMI indicated a slowdown in growth during March and a deceleration in its Employment sub-index, suggesting that the Fed’s efforts to cool the labor market may have some impact.
Meanwhile, expectations that the Fed is nearly done with its inflation-fighting interest rate hikes keep the US Treasury bond yields depressed near their lowest level in seven months. This should contribute to capping the USD and suggests that the path of least resistance for Gold price is to the upside.
Focus Remains Glued On Friday’s NFP Report From the United States
Traders, however, seem reluctant to place aggressive bets and prefer to wait on the sidelines before releasing the crucial US monthly employment details – popularly known as NFP on Friday. In the meantime, Thursday’s US economic docket, featuring the usual Weekly Initial Jobless Claims, will be looked upon for short-term opportunities later during the early North American session. The immediate market reaction, however, is more likely to be limited and might do little to provide any significant impetus to Gold price.
Gold Price Technical Outlook
From a technical perspective, the recent breakout and acceptance above the $2,000 psychological mark favor bullish traders. Moreover, oscillators on the daily chart hold positive territory and support prospects for additional gains. Hence, a move back towards retesting a one-year peak, around the $2,032 area touched on Wednesday, looks like a distinct possibility. Some follow-through buying should allow Gold price to aim to retest the March 2022 swing high, around the $2,070 region. This is closely followed by the all-time peak, around the $2,074-$2,075 zone, which, if cleared, will set the stage for a further near-term appreciating move.