Gold Price Forecast: XAU/USD defends bounce off weekly support near $1,850 ahead of US GDP

• Gold floats above an eight-day-old support line amid sluggish markets.
• US dollar struggles to defend the rebound from monthly low post-FOMC Minutes.
• Headlines from Ukraine and China may entertain traders amid light calendar in Asia, off in Europe.

Gold (XAU/USD) treads water around $1,855, defending the previous day’s corrective pullback from a one-week-old support line during Thursday’s Asian session as sluggish markets and a lack of major data/events seem to restrict the metal’s immediate moves. Also challenging the commodity prices is the mixed play of the US dollar moves and challenges to sentiment, especially from China and Ukraine.

The US Dollar Index (DXY) fades the bounce off a one-month low, struggling to stay beyond 102.00, after the latest Federal Open Market Committee (FOMC) Minutes endorsed the 50 basis points (bps) of rate hikes for only the next couple of meetings, raising doubts on the rate-lift trajectory past-September on statements like, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that another set of US data, namely the Durable Goods Orders for April, joined downbeat housing figures to weigh on the US dollar, amid growth fears. As per the latest US Durable Goods Orders, the growth slowed down to 0.4% MoM versus market forecasts and revised down prior readings of 0.6%. Also, the Core Durable Goods Orders rose 0.3% MoM versus 0.6% expected and 1.1% prior (revised).

However, the latest headlines from China and Ukraine seem to challenge the market sentiment and keep the greenback on the bull’s radar. That said, “Ukrainian President Volodymyr Zelensky on Wednesday savaged suggestions that Kyiv gives up territory and make concessions to end the war with Russia, saying the idea smacked of attempts to appease Nazi Germany in 1938,” per Reuters. On the other hand, China criticizes the US Draft Security Council resolution on North Korea and adds to the recently alive Sino-American tensions.

Amid these plays, the S&P 500 Futures remain directionless near 3,975 even after Wall Street managed to post notable gains. Further, the US Treasury yields also stay sluggish around 2.74% by the press time.

Moving on, a light calendar emphasizes risk catalysts for fresh impulse ahead of second readings of the US Q1 2022 GDP, Weekly US Jobless Claims and the Pending Home Sales for April, as well as the Fedspeak.

Also read: Gold Price Forecast: Technicals hint at more slides ahead

Technical analysis

Despite snapping a four-day uptrend on Wednesday, an upward sloping trend line from May 16 restricts the immediate downside of gold, around $1,848. Also challenging the gold sellers are the bullish MACD signals and steady RSI (14).

It should, however, be noted that a clear downside break of $1,848 support could make the metal vulnerable to visiting the yearly horizontal area surrounding $1,787, with the $1,800 threshold likely acting as an intermediate halt.

Alternatively, the 61.8% Fibonacci retracement of December 2021 to March 2022 upside, near $1,875, restricts immediate recovery moves of gold price.

Following that, a one-month-old descending trend line and the 100-day EMA will challenge the bulls at around $1,878.

Should the quote trade successfully past $1,878, the odds favoring a run-up towards the $1,900 round figure and then to the monthly high near $1,910 can’t be ruled out.

Gold: Daily chart

Trend: Further recovery expected