Gold Price Forecast: XAU/USD faces mixed risks, fails to capitalize on lower yields

XAU/USD Current price: $2,029

• XAU/USD rose after being able to hold above $2,010.
• The stronger Dollar keeps the upside limited, despite lower yields.
• Gold needs to rise above $2,045 to improve the short-term outlook.

Gold spot rose, offering signs of stabilization after the sharp reversal from record highs above $2,130 to $2,008 (Dec 5 low). It is consolidating near the $2,030 support level, on the back of lower Treasury yields but lacking upside momentum amid a stronger US Dollar.

Data released in the US on Wednesday included the ADP employment report, which showed an increase in private payrolls by 103,000, below the market consensus of 130,000. The Unit Labor Cost data indicated a decline of 1.2% during the third quarter. Despite these figures pointing to a more balanced labor market and less inflationary pressures, the US Dollar remained resilient.

More US employment data is due on Thursday, with the weekly Jobless Claims, and on Friday, the critical Nonfarm Payrolls report will be released. While the numbers are expected to show further softness, the impact on the US Dollar has been limited so far and has not significantly altered the positive momentum. Even the decline in the 10-year Treasury yield to 4.12%, the lowest since early September, has not provided a boost to Gold. The yellow metal remains in a bullish long term trend but is far from the all-time highs it reached just two days ago.

XAU/USD short-term technical outlook

Gold managed to post a daily gain after a sharp decline. The recovery came after successfully defending the $2,010 area. Currently, the price is moving within a range between $2,035 and $2,020. The bearish momentum has been persistent, but signs of stabilization have started to emerge.

On the 4-hour chart, the technical indicators are biased to the downside but lack strong conviction. The price is holding below the 20-Simple Moving Average, (SMA) which is situated at $2,043. The risk appears tilted to the downside, with a break below $2,020 exposing $2,010 and potentially the $2,000 zone. On the upside, a recovery above $2,050 would change the short-term bias to neutral or positive.

Support levels: $2,020 $2,010 $1,990

Resistance levels: $2,031 $2,045 $2,072