May 30, 2024

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Gold Price Forecast: XAU/USD approaches $1,980 as USD Index extends losses on Fed’s dovish guidance

2 min read
  • Gold price is marching toward $1,980.00 as fears of a US banking crisis renewed.
  • The USD Index has been battered as Fed has come extremely close to the terminal rate.
  • US bonds have been resilient as the US government is not considering insuring all uninsured bank deposits.

Gold price (XAU/USD) is gathering strength to capture the immediate resistance of $1,980.00 in the Asian session. The precious metal has found demand as the US Dollar Index (DXY) has resumed its downside journey and fears of a US banking crisis have refreshed.

The USD Index is looking to refresh its six-month low below 102.00 as the Federal Reserve (Fed) has come extremely close to the terminal rate, which would be restrictive enough to bring down the United States inflation to 2%. Fed chair Jerome Powell in his commentary stated, “some additional policy firming may be appropriate”.

Investors should be aware of the fact that the US banking fiasco had underpinned Gold as a safe-haven to dodge volatility. However, an assurance of safety for all banking deposits from US Treasury Secretary Janet Yellen had receded fears of the banking crisis.

The situation seems changed now as US Yellen commented on Wednesday that the government “is not considering insuring all uninsured bank deposits.” This has also strengthened the demand for US government bonds. The 10-year US Treasury yields have dropped further to near 3.45%.

Meanwhile, S&P500 futures have recovered firmly after a dive move on Wednesday, portraying an improvement in the risk appetite, however, caution still prevails as tight credit conditions from US banks will have a long-term impact. As per Fed’s commentary, US banking is sound and resilient but US banks will be more precautionary while disbursing advances to households and businesses.

Gold technical analysis

Gold price has shown a stellar recovery after sensing significant buying interest around the demand zone placed in a range of $1,933.90-1,938.40 on an hourly scale. The asset is marching towards the critical resistance plotted from March 20 high at $2,009.88.

A bull cross, represented by the 20-and 50-period Exponential Moving Averages (EMAs) at $1,954.39, adds to the upside filters.

The Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, which indicates more upside ahead.

Gold hourly chart

XAU/USD

OVERVIEW
Today last price1974.7
Today Daily Change4.35
Today Daily Change %0.22
Today daily open1970.35
TRENDS
Daily SMA201875.85
Daily SMA501884.9
Daily SMA1001833.88
Daily SMA2001779.1
LEVELS
Previous Daily High1978.93
Previous Daily Low1934.34
Previous Weekly High1989.51
Previous Weekly Low1867.66
Previous Monthly High1959.8
Previous Monthly Low1804.76
Daily Fibonacci 38.2%1961.9
Daily Fibonacci 61.8%1951.37
Daily Pivot Point S11943.48
Daily Pivot Point S21916.62
Daily Pivot Point S31898.89
Daily Pivot Point R11988.07
Daily Pivot Point R22005.8
Daily Pivot Point R32032.66

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