Gold Price Analysis: XAU/USD holds above 200DMA, but unable to break above $1850 resistance just yet

• Gold is trading in the $1840s, above its 200DMA but still below resistance in the $1850 area.
• A break above $1850 could signal a breakout from the bearish trend XAU/USD has been stuck in since mid-April.
• Focus next week will be on Fed minutes and US Q1 GDP and April Core PCE inflation data.

After managing to break back above its 200-Day Moving Average on Thursday as the US dollar and US yields waned, spot gold (XAU/USD) prices have failed to push above resistance at the $1850 mark. At present, the precious metal is trading flat on the day just above $1840, with buying ahead of the 200DMA at $1837 offering support for the time being.

Gold has been surprisingly resilient this week despite multiple Fed policymakers, including Fed Chair Jerome Powell, emphasizing the central bank’s focus on inflation fighting above all else and signaling the intention to continue with aggressive rate hikes. In recent weeks/months, hawkish Fed vibes have been a positive for the buck, which last week hit multi-decade highs, and have lifted US yields, which earlier this month hit multi-year highs.

But that has not been the case this week, with both yields and the buck moving lower (with weakness in the US dollar particularly surprising given this week’s torrid conditions in the global equity space). Technicians think that if XAU/USD can muster a break above the 200DMA and the $1850 level, this would snap a bearish trend that has been weighing on gold since mid-April when it nearly hit $2,000.

Friday looks likely to be a quiet session amid slow newsflow and no major US data releases of Fed speakers scheduled. That means such a break may have to wait until next week. But then again, with focus returning to the theme of Fed tightening next week (Fed minutes are released on Wednesday), maybe the recent moves lower in USD and US yields will prove short-lived.

Some have highlighted next week’s US GDP and inflation data as more important. The first estimate of Q1 GDP growth showed a surprise contraction in US output and traders will be looking for any revisions from the second estimate. Meanwhile, traders will be eyeing the April Core PCE Inflation report for any fresh signs that inflation may have peaked. Weak data could be supportive of gold if it 1) lessens the pressure on the Fed to be so aggressive or 2) weighs on risk appetite/the US dollar.