Gold Price Forecast: XAU/USD bounces off daily low, holds steady around $2,020 level

• Gold price reverses an intraday dip on Thursday, albeit lacks any follow-through buying.
• A modest US Dollar strength and stable performance in the equity markets cap gains.
• Bets for an imminent rate-hike pause by the Federal Reserve continue to lend support.
• Traders now seem reluctant and look to the US NFP report for some meaningful impetus.

Gold price attracts some dip-buying near the $2,008-$2,007 region on Thursday and stalls the previous day's retracement slide from its highest level since March 2022. The XAU/USD is currently placed just below the $2,020 level, nearly unchanged for the day, and is influenced by a combination of diverging forces.

Gold price is weighed down by a combination of factors

The US Dollar (USD) edges higher for the second successive day and recovers further from over a two-month low touched on Wednesday. This, in turn, prompts some intraday selling around the US Dollar-denominated Gold price. Apart from this, signs of stability in the equity markets undermine traditional safe-haven assets, including the XAU/USD. That said, rising bets for an imminent pause in the Federal Reserve's (Fed) rate-hiking cycle caps the upside for the Greenback and helps limit the downside for the non-yielding yellow metal.

Bets that Federal Reserve is down with rate hikes lend support

Investors seem convinced that the Fed is nearly done with its inflation-fighting interest rate hikes. In fact, the markets are pricing in an even chance of a 25 bps lift-off at the next Federal Open Market Committee (FOMC) meeting in May and the possibility of rate cuts by year-end. The bets were reaffirmed by the disappointing release of the ADP report from the United States (US) on Wednesday, which showed that private-sector employers added 145K jobs in March as compared to the 200K anticipated and the 261K previous.

Depressed US Treasury bond yields further act as a tailwind

Furthermore, the ISM Services PMI indicated a slowdown in growth during March, along with a deceleration in its Employment sub-index, suggesting that the Fed's efforts to cool the labor market may be having some impact. Meanwhile, expectations that the Fed is nearly done with its inflation-fighting interest rate hikes keep the US Treasury bond yields depressed near their lowest level in seven months. This should contribute to capping the USD and suggests that the path of least resistance for Gold price is to the upside.

Focus remains glued on Friday’s NFP report from United States

Traders, however, seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the crucial US monthly employment details - popularly known as NFP on Friday. In the meantime, Thursday's US economic docket, featuring the usual Weekly Initial Jobless Claims, will be looked upon for short-term opportunities later during the early North American session. The immediate market reaction, however, is more likely to be limited and might do little to provide any meaningful impetus to Gold price.

Gold price technical outlook

From a technical perspective, the recent breakout and acceptance above the $2,000 psychological mark favour bullish traders. Moreover, oscillators on the daily chart are holding in the positive territory and support prospects for additional gains. Hence, a move back towards retesting a one-year peak, around the $2,032 area touched on Wednesday, looks like a distinct possibility. Some follow-through buying should allow Gold price to aim to retest the March 2022 swing high, around the $2,070 region. This is closely followed by the all-time peak, around the $2,074-$2,075 zone, which if cleared will set the stage for a further near-term appreciating move.

On the flip side, the daily swing low, around the $2,008-$2,007 area could find some support near the $2,000 mark. Any further pullback is more likely to attract fresh buyers and remain limited around the $1,982-$1,980 horizontal zone. The latter should act as a pivotal point, which if broken decisively might prompt some technical selling and drag the Gold price towards the $1,955 intermediate support en route to the $1,945-$1,944 support.

Key levels to watch