Gold Price Forecast: XAU/USD tumbles toward $1,980 after US data

• US economy expanded less than expected during Q1. 
• US Dollar and Treasury yields rise after data. 
• XAU/USD drops from $2,000 to test $1,980; key support stands at $1,970. 

Gold price dropped sharply following the release of US Q1 GDP growth data. XAU/USD hit levels above $2,000 and then lost almost $20, falling to the $1,980 area.

Economic data from the US showed the economy grew at an annualized rate of 1.1% during the first quarter, below the 2% of market consensus and under the 2.6% of the previous quarter. The Core PCE rose 4.9%, above the expected 4.7%. The GDP deflator also exceeded expectations at 4% versus 3.7%. A different report showed a decline in Jobless Claims. 

The numbers showed slower growth and persistent inflation. US yields rose after the economic figures. The 2-year Treasury yield climbed above 4% to 4.03% while the 10-year spiked to 3.49% and then pulled back. The US Dollar Index turned positive for the day, rising above 101.60. Wall Street futures remained in positive territory. 

XAU/USD reached a two-day low at $1,981 and rebounded modestly. It remains with a bearish bias. The critical support is located around $1,970 and a break lower could trigger an acceleration. 

A rebound in XAU/USD could face resistance at $1,990 and $1,995. Gold bulls need price to consolidate above $2,005 in order to point to a sustainable extension. 

Technical levels