Gold Price Forecast: XAU/USD holds steady near multi-month peak, above $1,950 level

• Gold price gains traction for the third straight day and climbs to over a nine-month top.
• A less hawkish Federal Reserve continues to weigh on the US Dollar and lends support.
• A modest uptick in the US bond yields limits losses for the buck and acts as a headwind.

Gold price builds on this week's positive move from the $1,900 round-figure mark and scales higher for the third successive day on Thursday. The momentum lifts the XAU/USD to the highest level since April 2022, around the $1,960 area during the first half of the European session, albeit lacks strong follow-through.

Modest US Dollar recovery caps gains for Gold price

The US Dollar (USD) stages a modest intraday recovery from a fresh nine-month low and turns out to be a key factor acting as a headwind for Gold price. Slightly oversold conditions prompt some short-covering around the USD in the wake of rebounding US Treasury bond yields. That said, a dovish assessment of the Federal Open Market Committee (FOMC) statement on Wednesday should cap the upside for the buck and lend support to the US Dollar-denominated commodity.

Less hawkish Federal Reserve acts as tailwind for Gold price

As was expected, the Federal Reserve(Fed) decided to raise interest rates by 25 bps and reiterated that it will continue hiking policy rates to cool price pressures. This fueled speculation that headwinds stemming from rapidly rising borrowing costs could lead to a sharp economic slowdown in the United States (US). Furthermore, Fed Chairman Jerome Powell acknowledged that the disinflationary process is in its early stages and lifted bets for a possible rate cut later this year.

Traders now look to key central bank policy decisions

Expectations that the Fed is nearing the end of the current policy tightening cycle might hold back the USD bulls from placing aggressive bets. Apart from this, a softer risk tone might continue to lend some support to the safe-haven Gold price. Traders might also refrain from placing fresh bets and move to the sidelines ahead of the key central bank event risks. The Bank of England (BoE) and the European Central Bank (ECB) are scheduled to announce their decisions this Thursday.

Focus will then shift to Friday’s jobs data from United States

Later during the early North American session, traders will take cues from the release of the Weekly Initial Jobless Claims data from the US. The market focus, meanwhile, now seems to have shifted to the closely-watched monthly employment details from the US. The popularly known NFP report should provide a fresh impetus to the USD and help determine the near-term trajectory for the Gold price.

Gold price technical outlook

From a technical perspective, acceptance above the previous YTD peak, around the $1,949 region touched on January 26, could be seen as a trigger for bulls. That said, Relative Strength Index (RSI) on the daily chart is already flashing slightly overbought conditions and warrants caution before positioning for any further appreciating move. Nevertheless, Gold price seem poised to surpass an intermediate hurdle near the $1.970-$1,980 area and aim to reclaim the $2,000 psychological mark for the first time since March 2022.

On the flip side, a pullback below the $1,950-$1,949 area might now be seen as a buying opportunity near the $1,930-$1,920 region. This should help limit the downside for the Gold price near the $1,900 round figure. The latter should act as a pivotal point, which if broken decisively might prompt technical selling and expose the $1,880-$1,877 support. The XAU/USD could eventually slide to test the next relevant support near the $1,856-$1,855 region.

Key levels to watch