Gold Price Forecast: XAU/USD buyers approach $2,000 on fimer sentiment, downbeat yields

• Gold Price jumps to seven-week high as risk appetite improves.
• United States Retail Sales, Industrial Production appear promising for June but failed to revive yields, US Dollar recovers a bit.
• China news, clear breakout of two-month-old resistance adds strength to XAU/USD upside.
• Risk catalysts, Fed bets past July eyed for clear directions.

Gold Price (XAU/USD) grinds near the highest level since early June after rising the most in a week, making rounds to $1,978 amid early Wednesday morning in Asia. In doing so, the precious metal benefits from the upbeat market sentiment, as well as the United States Treasury bond yields, while ignoring the latest rebound in the US Dollar. Adding strength to the XAU/USD upside could be a technical breakout of the previously key resistance line, now support. However, a lack of major data/events seems to restrict immediate moves of the Gold Price.

Gold Price rallies as United States Treasury bond yields dribble amid risk-on mood

Gold Price edges higher following the previous day’s more than a 1.00% daily jump as market players seek more clues to sustain the latest run-up. That said, the yellow metal recently cheered the US Treasury bond’s inability to remain firmer, despite bouncing off the latest troughs, amid a firmer risk profile. Adding strength to the upside momentum could be the US Dollar’s struggle to pick up bids even if mixed United States data allowed the US Dollar Index (DXY) from the lowest level in 15 months.

That said, market sentiment improves on the positive performance of the US banks, as well as the risk-positive headlines surrounding China, which in turn allowed the Wall Street benchmarks to refresh the yearly top and propel the Gold price. It’s worth noting, however, that the benchmark US 10-year Treasury bond yields remain pressured around 3.78% while the two-year counterpart edges higher near 4.76% at the latest.

Share prices of the top-tier US banks like Bank of America, Morgan Stanley and Bank of New York Mellon Corp rallied on Tuesday on news that higher interest rates had helped boost profits in the second quarter, shared via Reuters. “Signs of a revival in investment banking, which has been in the doldrums as higher rates and economic uncertainty put a damper on deals and trading, also drove share gains,” said the news.

On the other hand, Washington’s efforts to re-establish ties with China, via multiple diplomats’ visits to Beijing one after the other, join the dragon nation’s rejection of economic fears and hopes of witnessing a 5.0% growth rate in 2023 to underpin optimism about one of the world’s biggest Gold customer. It should be noted that China’s easy prints of the second-quarter (Q2) Gross Domestic Product (GDP) flagged economic fears about the second-largest economy and prod the XAU/USD buyers previously.

Elsewhere, US Retail Sales growth for June came in as 0.2% MoM versus 0.5% expected and prior (revised). However, the Retail Sales Control Group marked 0.6% growth versus market forecasts of -0.3% and 0.3% previous readings. It should be noted that the US Industrial Production reprinted -0.5% for June compared to analysts’ estimations of 0.0%.

It’s worth noting, however, that the US Dollar Index (DXY) initially dropped to the fresh 15-month low before bouncing off 99.56 level, around 99.95 by the press time, which in turn prod the Gold buyers at the seven-week high. However, the DXY has been sluggish of late.

Moving on, the risk-on mood and the US Dollar’s inability to defend the latest run-up can prod the Gold buyers amid a light calendar and the market’s wait for the next week’s Federal Reserve (Fed) monetary policy meeting. It should be observed that the latest concerns about the Fed’s rate cut expectations in 2024 may add strength to the Gold Price.

Gold Price Technical Analysis

Gold Price justifies a U-turn from the 50-SMA, as well as an upside break of a two-week-old descending resistance line, now support, while refreshing a multi-day peak.

However, the overbought RSI (14) line highlights the $2,000 as an important upside hurdle for the XAU/USD bulls to watch for further ruling.

In a case where the Gold Price remains firmer past $2,000, a gradual run-up towards April’s peak of around $2,050 and then to the yearly top surrounding $2,067 can’t be ruled out.

On the downside, a daily closing below the resistance-turned-support, close to $1,962, as well as the 50-SMA support of $1,952, becomes necessary for the XAU/USD bear’s return.

Even so, a four-month-old horizontal area of around $1,935 appears a tough nut to crack for the Gold sellers to conquer for conviction.

Overall, the Gold Price remains on the bull’s radar even if the upside room appears limited.

Gold Price: Daily chart

Trend: Further upside expected