Gold Price Forecast: XAU/USD bears approach $1,980 support on First Republic woes, Fed, US NFP eyed

• Gold price stays inside two-week-old trading range despite posting firmer weekly close.
• United States statistics renew hawkish Federal Reserve bias and prod XAU/USD bulls.
• Fears surrounding First Republic Bank, recession talks exert downside pressure on the Gold price.
• No surprises from Fed, downbeat US Nonfarm Payrolls may bolster XAU/USD upside.

Gold price (XAU/USD) drops towards a short-term key support confluence as sour sentiment underpins the US Dollar demand and weighs on the metal prices during the early trading hours of the key week. That said, the XAU/USD renews its intraday low near $1,986 as it bears the burden of the market’s fears emanating from First Republic Bank amid hawkish hopes from the Federal Reserve, especially after the recently firmer United States inflation clues.

Gold price declines on First Republic Bank inflicted fears

Gold price fails to extend the previous weekly gains as traders brace for the top-tier data/events amid holidays in China and Europe. Even so, anxiety surrounding the troubled US bank, namely the First Republic, exerts downside pressure on the XAU/USD.

After witnessing an exodus of withdrawal and a slump in the First Republic's share price, the Federal Deposit Insurance Corporation (FDIC) calls in bids for the troubled US bank in which multiple top-tier private organizations, including JP Morgan, took part. The results are up for release and can give only knee-jerk optimism as an immediate defense of the bank by a private player isn’t a solution to the broad banking problems. On the contrary, the same raises fears of such actions for the larger public banks in the future and hence can keep the risk-off mood intact.

United States inflation clues propel hawkish Federal Reserve bets, weigh on XAU/USD

Apart from the market’s fears emanating from the First Republic, hawkish Federal Reserve (Fed) concerns also weigh on the Gold price. That said, the CME Group FedWatch Tool suggests higher odds of the Fed’s 0.25% rate hike in May and June, as well as a reduction in the market’s bets on the September rate cut from the US central bank.

While tracing the latest shift in the market bets on the Fed, the United States statistics surrounding inflation gain major attention. In the last week, initial estimations of the US Gross Domestic Product (GDP) for the first quarter (Q1) of 2023, also known as Advance readings, marked mixed outcomes. That said, the headline US GDP Annualized eased to 1.1% from 2.0% expected and 2.6% prior but the GDP Price Index inched higher to 4.0% on an annualized basis from 3.9% prior and 3.8% market consensus. Further, the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, for March matched 0.3% market forecasts and prior to MoM but rose to 4.6% from 4.5% expected on YoY, with an upwardly revised previous reading of 4.7%. On the same line, the US Employment Cost Index also increased by 1.2% in Q1 2023, versus the 1% increase marked previously.

Downbeat China PMIs also please Gold sellers

Considering China’s position as one of the world’s biggest Gold consumers, the latest disappointment from the Dragon Nation’s official Purchasing Managers Indexes (PMIs) for April exert downside pressure on the XAU/USD. During the weekend, China’s official NBS Manufacturing PMI disappointed markets with 49.2 figures for April, versus 51.4 market forecasts and 51.9 prior readings. It’s worth noting that the Non-Manufacturing PMI rose past 50.4 expected figures to 56.4 but remained below 58.4 reported in March.

A busy week ahead for XAU/USD traders, Fed, NFP in focus

Although markets in China, Europe and the UK are off on Monday, a slew of central bank announcements and top-tier data from the United States, Eurozone, Australia and New Zealand are likely to offer a busy week ahead to the Gold traders. Among them, Wednesday’s Fed meeting, Thursday’s ECB monetary policy announcements and Friday’s US jobs report for April will be crucial to watch for the Gold price predictions. Should the Fed hawks keep the reins and the US economics are firmer as well, the Gold price may witness the much-awaited pullback.

Gold price technical analysis

Gold price seesaws within a nearly $30.00 trading range as it consolidates the early March to the mid-April run-up.

That said, a six-week-old ascending trend line joins the 200-bar Simple Moving Average (SMA) to put a short-term floor under the XAU/USD price near $1,980.

On the contrary, a fortnight-old downward-sloping resistance line, close to $2,007 at the latest, guards immediate recovery of the Gold price.

It’s worth noting, however, that the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator and a steady Relative Strength Index (RSI) line, placed at 14, suggest a continuation of the metal’s sideways move.

Meanwhile, multiple upside hurdles near $2,010 and $2,030 can test the XAU/USD bulls past $2,007 before directing them to the recent peak of near $2,050.

Alternatively, a downside break of $1,980 needs validation from the late March swing low around $1,935 before welcoming the Gold bears.

Gold price: Four-hour chart

Trend: Further grinding expected