Gold Price Forecast: XAU/USD menaces a bearish breakout of the $2,000 mark

XAU/USD Current price: 2,004.64

• Resilient United States data and comments from Fed officials undermine the market mood.
• Stocks trade in the red for a second consecutive day, yields reach fresh multi-week highs.
• XAU/USD bearish momentum supports a slide below the $2,000 mark in the near term.

Spot gold trades at its lowest since mid-December, as the US Dollar extends its advance as global stocks fell further. The XAU/USD pair trades near an intraday low of $2,003.28 mid US-afternoon, as investors keep reducing bets on a Federal Reserve (Fed) rate cut next March. The CME FedWatch Tool shows a 52% chance of such an event, down from roughly 70% a couple of weeks ago.

Mixed United States (US) data released on Wednesday further weighed on the pair. The country reported that Retail Sales were up 0.6% MoM in December, while Industrial Production in the same month increased 0.1%, both beating expectations. Capacity Utilization rose 78.6%, below the 78.7% expected. Resilient macroeconomic data combined with hawkish words from Fed officials weighing down the odds for a March cut.

Government bond yields are also on the rise, with the more sensitive 2-year Treasury note currently offering 4.36%, while the 10-year note yields 4.10%, both standing at fresh multi-week highs. Wall Street, on the other hand, extends its Tuesday slump with the three major indexes trading in the red.

XAU/USD short-term technical outlook

XAU/USD is down for a second consecutive session, and the daily chart shows additional declines are on the table. The pair extends its slide below a mildly bearish 20 Simple Moving Average (SMA) but holds above the 100 and 200 SMAs, both in the $1,960 region. Technical indicators, in the meantime, head sharply south within negative levels without signs of bearish exhaustion.

The bearish momentum is stronger in the near term. The 4-hour chart shows XAU/USD develops below all its moving averages, slowly gaining downward traction. The 200 SMA provides dynamic resistance at around $2,037.25. Finally, technical indicators maintain the downward pressure near oversold readings, supporting a bearish breakout of the $2,000 threshold.

Support levels: 2,049.15 2,037.90 2,024.50

Resistance levels: 2,062.35 2,074.40 2,087.00