Gold Price Forecast: XAU/USD struggles around $1890s and dives despite US Dollar weakness

• Gold price dives and eyes a break to new weekly lows below $1860.44.
• Downbeat economic data in the United States spurred Gold’s jump to its daily high at $1890.21.
• Gold Price Forecast: Short term, is downward biased, and it might test $1850.00.

Gold prices remained downward pressured on Thursday, even though the US Dollar (USD) is printing losses of 0.48%. Meanwhile, US Treasury bond yields extended their losses from around weekly highs at 3.692% to 3.592%, a tailwind for Gold prices. Despite all that, the XAU/USD is trading below its opening price, exchanging hands at 1867.54, a troy ounce.

US Initial Jobless Claims underpinned XAU/USD, though retreated those gains

US equities continue to rise throughout the North American session. XAU/USD has failed to gain traction after hitting a daily high of $1890.21, shy of the 20-day Exponential Moving Average (EMA) at $1893.07.

Economic data from the United States (US) showed that unemployment claims rose above estimates, indicating a slight shift in the US labor market. Initial Jobless Claims for the week ending February 4 increased by 195K, above forecasts of 190K, as reported by the Department of Labor (DoL). Albeit high-tech companies had announced a series of layoffs, the US economy added more than 500K in January, as revealed by the last US Nonfarm Payrolls report.

Federal Reserve officials’ hawkish commentary, a headwind for Gold

Elsewhere, a slew of Federal Reserve officials added that more rate hikes are needed as the US central bank battles to curb high inflation in the United States. The New York Fed President John Williams said, “seems a very reasonable view of what we’ll need to do this year to get the supply and demand imbalances down.”

Echoing some of his comments was Lisa D. Cook. She said that moving in smaller rate increases “is appropriate” as the central bank asses the effects of cumulative tightening. Later, Minnesota’s Fed President Neil Kashkari added that he believes the Federal Funds Rate (FFR) would need to go as high as 5.4%, according to his projections.

In the meantime, the US Dollar Index, a gauge of the buck’s value against a basket of six currencies, edges down by 0.31%, at 103.147, failed to bolster Gold prices. The US 10-year Treasury bond yield stages a recovery after dipping to its daily low of 3.575% and climbing to 3.609%.

Gold Technical Analysis

XAU/USD remains downward pressured, eyeing to extend its losses below Monday’s low of $1860.44, which is also the weekly low. An extension below would set Gold’s to test the 50-day Exponential Moving Average (EMA) around $1856.55. Once broken, XAU/USD’s bearish continuation would extend to the December 27 daily high-turned-support at $1833.29, followed by the 100-day EMA at $1816.20.

As an alternate scenario, XAU/USD’s resistance lies at the 20-day EMA at 1892.41, ahead of the psychological $1900 mark.