Gold Price Forecast: XAU/USD rises as weak US data fueled dovish bets on the Fed

• The XAU/USD escalated to a high of $1,987, seeing 1.35% gains.
• US Industrial Production from October came in lower than expected. Jobless claims rose to their highest in three months.
• US yields are sharply falling.

The XAU/USD Gold spot price experienced an impressive upward spike on Thursday, rising toward $1,985 and seeing a daily gain of 1.35%. The metal’s momentum was driven by a decline in US Treasuries, which fell after the report of weak US data suggesting that markets are betting on lower odds of additional tightening by the Federal Reserve (Fed).

On the data front, the Initial Jobless Claims for the week ending November 10 from the US  saw a noticeable increase to 231,000, surpassing the predicted 220,000. Furthermore, Industrial Production did not meet expectations for October, as it showed a 0.3% decline and a 0.6% drop in MoM expected by the markets. These unfavourable US economic figures fuelled a decline in the US Treasuries, often seen as the cost of holding non-yielding metals, which allowed the price to spike. The 2-year bond rate fell to 4.83%, and the 5 and 10-year yields declined by 4.43% and 4.45%, respectively.

In the meantime, the CME FedWatch tool suggests that markets have already priced in a pause in December and are now pricing rate cuts in April-May of 2024. In that sense, as long as the US Dollar weakens and investors bet on a less aggressive Fed, the yellow metal could see further upside.

XAU/USD levels to watch

On the daily chart, the XAU/USD displays a bullish bias after the price cleared most of November's losses. The Relative Strength Index (RSI) indicates positive momentum with an ascending slope above its midline, while the Moving Average Convergence (MACD) histogram displays rising green bars. Zooming out, the pair is above the 20,100,200-day Simple Moving Average (SMAs), suggesting that the bulls are also in control on the broader context.

Supports: $1,975 (20-day SMA), $1,930 (100 and 200-day SMA),$1,915.
Resistances:$2,000,$2,030, $2,050.

XAU/USD daily chart