Gold Price Forecast: XAU/USD trims losses below $2,000, looks prone to downside amid hawkish Fed bets

• Gold price has recovered its opening sell-off and has scaled back above the $2,000.00 resistance.
• Rock-bottom US Unemployment Rate has recuperated expectations of a consecutive 25 bps rate hike from the Fed.
• Solidifying expectations of one more rate hike from the Fed pushed US Treasury yields higher.

Gold price (XAU/USD) witnessed an intense selling interest at open but showed a decent recovery amid the presence of responsive buyers at lower levels. The precious metal dropped firmly below the psychological support of $2,000.00 as chances for one more 25 basis points (bps) rate hike have soared significantly but have managed to recuperate losses and have scaled back above the $2,000.00 resistance. The CME Fedwatch tool shows a sudden increase in chances of a 25 bp rate hike by more than 65%.

Rock-bottom Unemployment Rate in the United States economy has recuperated expectations of a consecutive 25 bps rate hike from the Federal Reserve (Fed). The jobless rate landed at 3.5% on Friday, lower than the expectations and the former release of 3.6%. Meanwhile, the US Nonfarm Payrolls (NFP) data remained subdued as the US economy added mildly lower employment in March at 236k than the consensus of 240K.

Analysts at Wells Fargo pointed out this is the type of employee report they believe the Fed wants to see: job growth slowing in an orderly fashion, labor supply expanding, and wage growth that is edging closer to rates that are consistent with the central bank's 2% inflation target. They expected another rate hike by 25 bps in May, probably the last one.

Meanwhile, S&P500 futures have continued positive moves further, shown late Friday, on hopes that the Fed is approaching terminal rate quickly. The US Dollar Index (DXY) has shown a marginal correction but is managing to sustain above 102.00. Solidifying expectations of one more rate hike from the Fed pushed US Treasury yields higher. The yields offered on 10-year US government bonds jumped above 3.41%.

Gold technical analysis

Gold price is auctioning in a Rising Channel chart pattern on an hourly scale in which corrections are considered as buying opportunities by the market participants. The yellow metal is making efforts in keeping itself above the $2,000.00 resistance.

The 20-and 50-period Exponential Moving Averages (EMAs) are on the verge of delivering a bearish crossover of around $2,011.50.

Also, the Relative Strength Index (RSI) (14) is expected to skid below 40.00, which would result in a bearish momentum.

Gold hourly chart