Gold Price Forecast: XAU/USD lures bulls ahead of Federal Reserve Minutes, United States Nonfarm Payrolls

• Gold price grinds higher inside bullish chart pattern as 2023 begins for traders.
• US Dollar weakness underpins XAU/USD strength even as holiday mood limits upside momentum.
• Gold buyers will seek clues about Federal Reserve’s Pivot, can also cheer softer US Nonfarm Payrolls.

Gold price (XAU/USD) begins 2023 without any major surprise as it seesaws near $1,825 during the early hours of Monday’s Asian session. While the New Year holidays in multiple markets appeared to have restricted the metal’s immediate moves, broadly-softer US Dollar kept the bright metal buyers hopeful ahead of this week’s top-tier data and events from the United States. Even so, fears emanating from China and concerns surrounding the global moves in 2023 probe the XAU/USD bulls.

Gold cheers mixed United States data that weigh on US Dollar

In 2022, US Dollar Index (DXY) reported the biggest yearly gain since 2015. Even so, the greenback’s gauge versus the six major currencies reported the last three months as loss-making ones. The reason could be linked to the recently softer data from the United States (US) that fuelled expectations of the Federal Reserve’s (Fed) pause in the rate hikes. It’s worth noting, however, that the Gold price strength, due to the DXY weakness appeared to have recently been challenged by the Covid fears emanating from China, as well as downbeat comments from the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva.

On Friday, Chicago Purchasing Managers’ Index crossed the market consensus of 41.2 and the 37.2 previous readings to print the 44.9 figures for December. Even so, the activity gauge signaled contraction for the fourth consecutive month.

Market fears probe XAU/USD bulls

Despite the broadly weaker DXY in the last three months, the recent fears emanating from the worsening coronavirus conditions in China seem to challenge the Gold buyers, mainly due to Beijing’s status as one of the world’s biggest commodity users.

On Saturday, Chinese President Xi Jinping appeared in a televised speech to mark the New Year and called on for more effort and unity as the country enters a "new phase" in its approach to combating the pandemic.

Following that, IMF’s Managing Director Kristalina Georgieva said that the New Year is going to be tougher than the year we leave behind. The IMF Chief also added, “Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously.”

Given the global economic fears, the XAU/USD bulls may witness further hardships amid the holiday-thinned markets.

Gold traders await Federal Reserve Minutes, United States Nonfarm Payrolls

In addition to the challenges to Gold traders from China and the global economic concerns, the cautious mood ahead of the Minutes of the latest Federal Open Market Committee (FOMC) and monthly employment data for the United States could also challenge the XAU/USD upside.

The scheduled events and data become more important as there has been a gap of one week since the US reported any major catalysts and the US Dollar has been down mostly during the said period. Additionally, the receding hawkish bias on the Federal Reserve’s (Fed) next move also inflates the importance of the scheduled factors.

That said, the FOMC Minutes will be closely observed for any clues on the Fed’s pivot as the US central bank signaled lower rates for longer, which in turn could help the Gold price remain firmer.

On the other hand, downbeat US employment numbers could help the US Dollar to remain easy and propel the Gold price.

Gold price technical analysis

Gold price portrays a one-month-old bullish channel formation on the four-hour chart. The bullion’s upside momentum also justifies bullish signals on the Moving Average Convergence and Divergence (MACD) indicator, as well as the upbeat Relative Strength Index (RSI) line, located at 14.

It’s worth noting, however, that the RSI approaches the overbought territory and suggests the XAU/USD pullback, which in turn highlights a three-week-long horizontal hurdle surrounding $1,825 as the key for the Gold buyers to watch.

Following that, the aforementioned ascending trend channel’s upper line, close to $1,835 by the press time, could challenge the metal’s further upside.

In a case where the Gold bulls ignore the likely overbought RSI and cross the $1,835 resistance, the June 2022 peak of around $1,880 will be in focus.

Alternatively, an upward-sloping support line from Wednesday restricts the immediate downside of the Gold price near $1,820, a break of which could drag the metal towards the 100-Exponential Moving Average (EMA) level near the $1,800 threshold.

Even so, the Gold remains on the bull’s radar unless its stays beyond the stated bullish channel’s support line, near $1,785 at the latest.

Hence, the Gold price is technically strong even if a pullback is brewing as of late.

Gold price: Four-hour chart

Trend: Bullish