Gold Price Forecast: XAU/USD pierces $1,900 to renew weekly top as USD keeps post-Fed losses

• Gold prices renew daily tops during three-day uptrend.
• DXY remains pressured near one-week low on Fed Chair Powell’s rejection of 75 bps rate hike.
• Sino-American crisis, covid fears and geopolitical headlines concerning Russia contribute to the cautious mood but fail to underpin USD strength.
• US NFP will be in focus, BOE, risk catalysts will direct short-term moves.

Gold (XAU/USD) prices remain firm for the third consecutive day while refreshing weekly top around $1,900 during early Thursday. In doing so, the yellow metal takes clues from the softer US dollar, as well as the market’s cautious mood on China’s return.

The US dollar’s weakness could be linked to Fed Chair Jerome Powell’s rejection of a rate hike worth 75 basis points (bps) in upcoming meetings. That said, the Fed matched wide market forecasts by providing 50 basis points (bps) of a rate hike and clues for the Quantitative Tightening (QT) the previous day.

Elsewhere, China’s return to markets allows traders to rethink the post-Fed optimism but the doubts over the US dollar, especially after the Fed moves, seem to direct the safe-haven flow to gold.  Among the key risk catalysts that recently gained market attention are the US-China tussles as the US Securities and Exchange Commission (SEC) added over 80 Chinese firms to the list of companies facing probable delisting from the US exchanges. On the same line were ongoing covid woes and the European Union’s (EU) sixth round of sanctions on Russia.

While portraying the mood, the S& 500 Futures drop 0.12% intraday, snapping a three-day rebound from a yearly low, despite Wall Street’s rally.

Although the risk aversion wave and softer US dollar, coupled with the technical breakout, underpin gold price upside, the cautious mood ahead of Friday’s US Nonfarm Payrolls (NFP) may challenge the metal buyers. For the day, US Jobless Claims, Nonfarm Productivity and Unit Labor Cost, as well as the Bank of England (BOE) monetary policy meeting, can entertain the XAU/USD traders.

Also read: Markets breathe sigh of relief

Technical analysis

A clear upside break of a 13-day-old descending trend line and 50-SMA, around $1,890 by the press time, joins upbeat RSI line to direct gold buyer towards the 38.2% Fibonacci retracement (Fibo.) of April 18 to May 03 downside, around $1,908.

Following that, highs marked during late April and 200-SMA, respectively around $1,920 and $1,930, could test the bulls before giving them control.

On the contrary, pullback moves may aim for the $1,890 retest before calling the gold sellers.

Also acting as a downside filter is one-week-old horizontal support near $1,870, a break of which will direct XAU/USD towards the weekly low of $,1850.

Gold: Four-hour chart

Trend: Further upside expected