Gold Price Outlook: XAU/USD Targets $1,990 on Employment Data

During Thursday's Asian session, the Gold Price (XAU/USD) has experienced a rise, reaching a new intraday high around $1,967. This upward movement is primarily attributed to the retreat of the US Dollar and the optimism surrounding the potential passage of the United States debt-ceiling bill in the House of Representatives. Additionally, the recent shift in the Federal Reserve's stance, mixed economic data, and less impressive comments from policymakers have also contributed to the positive sentiment for gold. However, to confirm the upward trend, market participants are eagerly awaiting today's release of the US ADP Employment Change data for May, which serves as an early indicator for the upcoming Nonfarm Payrolls (NFP) report. Furthermore, the multiple Purchasing Managers' Indexes for the previous month will also provide valuable insights for gold investors.

Gold Price cheers United States debt ceiling optimism

The Gold Price is experiencing a positive impact as concerns over a potential United States default diminish. This follows reassurances from influential US policymakers who have expressed support for the passage of the US debt-ceiling bill through the House of Representatives. The vote, which took place at 00:30 GMT on Thursday, has bolstered hopes and contributed to the favorable sentiment surrounding gold.

Republican leader Mitch McConnell expressed optimism that the US debt ceiling bill would pass and proceed to the Senate on Thursday. The outcome of this bill hinges on the comments and support of policymakers, particularly since Republicans hold control over the House, where the bill is currently being deliberated.

According to Reuters, a bill aimed at suspending the US government's $31.4 trillion debt ceiling and averting a catastrophic default successfully passed a crucial procedural hurdle in the House of Representatives on Wednesday. This development sets the stage for a vote on the bipartisan debt deal itself, signaling progress in the ongoing debate surrounding the debt-ceiling bill.

While the fading concerns of a US default provide support for an upward movement in the Gold price, there are still hardline Republicans such as Chip Roy and Rand Paul who have the potential to delay long-awaited announcements, potentially triggering a risk-off sentiment in the market. As a result, Gold buyers remain cautious and attentive to any developments.

Federal Reserve hawks retreat, mixed US data also favor XAU/USD bulls

In addition to the optimism surrounding the United States' ability to address default concerns, the Gold buyers have found support in recent mixed US data and indications of a potential pause in the Federal Reserve's rate hike trajectory.

On Wednesday, US JOLTS Job Openings for April exceeded expectations at 10.103 million, compared to the anticipated 9.375 million and the previous figure of 9.745 million. However, the Chicago Purchasing Managers' Index for May dropped to 40.4, falling short of both the previous reading of 48.6 and the market forecast of 47.0. These contrasting data points have caught the attention of Gold buyers.

Regarding the Federal Reserve's stance, Michelle Bowman, a Fed Governor, acknowledged the recovery in the residential real estate market and highlighted the implications of stabilizing home prices on the Fed's inflation-fighting efforts. Cleveland Fed President Loretta Mester expressed her support for a rate hike in June, while Fed Governor and vice chair nominee Philip Jefferson suggested that skipping a rate hike would allow for more data analysis before making further policy decisions. Philadelphia Fed President Patrick Harker also indicated his inclination to support abstaining from interest rate hikes at the next central bank meeting in June.

To support this perspective, Nick Timiraos from the Wall Street Journal (WSJ) suggested that the Federal Open Market Committee (FOMC) is likely to keep interest rates unchanged in June, providing a potential boost to the XAU/USD price.

Gold price technical analysis

The Gold price has successfully rebounded from a significant horizontal support area that has been in place for 11 weeks. Additionally, it has broken above a descending trend line that formed in early May, signaling a positive shift. As a result, Gold is poised to record its first weekly gain in three weeks.

Supporting the upside momentum, the Moving Average Convergence and Divergence (MACD) indicator is displaying bullish signals, and the Relative Strength Index (RSI) is showing strength, currently positioned at 14.

However, it is worth noting that the RSI is approaching overbought levels, indicating a potential short-term hurdle around the $1,985 price level, where a fortnight-long horizontal resistance zone is located.

If the Gold price continues its upward movement, it could encounter resistance near the 200-Simple Moving Average (SMA) at approximately $1,992, followed by the psychological level of $2,000. These levels may act as barriers before the bulls regain full control.

On the downside, a pullback in XAU/USD would require confirmation from the support-turned-resistance trend line, which originated from May 03 and currently sits around $1,945.

Furthermore, the Gold bears might face initial resistance at the previously mentioned horizontal support zone, approximately ranging from $1,935 to $1,933.

In summary, the Gold price remains in an upward trajectory, but the path towards further gains is expected to be challenging and may involve fluctuations along the way.

Gold price: Four-hour chart

OVERVIEW

Today last price: 1966.39

Today Daily Change: 7.11

Today Daily Change %: 0.36%

Today daily open: 1959.28

TRENDS

Daily SMA20: 1991.79

Daily SMA50: 1991.7

Daily SMA100: 1936.74

Daily SMA200: 1832.52

LEVELS

Previous Daily High: 1963.56

Previous Daily Low: 1932.12

Previous Weekly High: 1985.3

Previous Weekly Low: 1936.77

Previous Monthly High: 2048.75

Previous Monthly Low: 1949.83

Daily Fibonacci 38.2%: 1951.55

Daily Fibonacci 61.8%: 1944.13

Daily Pivot Point S1: 1939.75

Daily Pivot Point S2: 1920.21

Daily Pivot Point S3: 1908.31

Daily Pivot Point R1: 1971.19

Daily Pivot Point R2: 1983.09

Daily Pivot Point R3: 2002.63

*The provided information is for reference purposes only and should not be considered as financial advice or investment recommendation.