Gold Price Forecast: XAU/USD recovers after posting a fresh 2024 low

XAU/USD Current price: 1,991.05

• The market sentiment stabilized following risk-off movements post-US CPI.
• The latest United States data confirmed the Federal Reserve’s caution stance.
• XAU/USD is in corrective mode, but bears could still push it lower.

Spot Gold extends its yearly slide on Wednesday, trading as low as $1,984.03, a level not seen since last December. XAU/USD recovered the $1,900 mark in the mid-American session as demand for the US Dollar lost steam amid a better market mood. Wall Street is up after plummeting on Tuesday, with the three major indexes posting modest gains. Additionally, government bond yields retreated from the multi-week peaks posted on Tuesday, adding to the USD’s near-term weakness.

Market players seem to have accepted the latest day on rate-cut decisions. Global policymakers have been pouring cold water on a looser monetary policy since the last quarter of 2023, but the market bet against them. Their words have been optimistic but cautious, and the message remains unchanged. The difference is macroeconomic data showing that labor markets remain tight, and inflation is above central banks’ target bands.

Particularly in the United States (US), the surprise increase in January inflation, following a solid Nonfarm Payrolls report, diluted hopes for a rate cut in the near term. Federal Reserve’s (Fed) Chairman Jerome Powell clarified it after the latest monetary policy meeting, while macroeconomic data confirmed it.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that it trades around its opening after posting a lower low, while technical readings suggest the risk remains skewed to the downside. The pair barely holds above a mildly bullish 100 Simple Moving Average (SMA), while the 20 SMA stands directionless far above the current level. At the same time, technical indicators head south with uneven strength, close to oversold readings and without signs of bearish exhaustion.

In the 4-hour chart, XAU/USD seems poised to correct. Technical indicators turned higher within extreme readings, still developing in oversold territory. At the same time, the 20 SMA heads south almost vertically above the current price but below the longer moving averages. Recoveries will likely attract sellers on approaches to the $2,000 mark as bears retain control.

 Support levels:  1,976.50 1,962.70 1,949.30

Resistance levels: 2,005.90 2,018.50 2,032.10