Gold Price Forecast: XAU/USD bulls in town on lower Fed bets

• Gold price is on the front foot to test into the $2,000 on US Dollar weakness. 
• US Dollar weighed by poor US data, weighing on Federal Reserve hawkish sentiment.

Gold price rallied on Monday and took out the $2,000 mark with a slump in the US Dollar on the back of bond yields falling on expectations a surprise cut in The Organization of the Petroleum Exporting Countries, OPEC+, production will spur inflation. This was dimming hopes the Federal Reserve will cut interest rates this year.

The rise in the yellow metal comes after The Organization of the Petroleum Exporting Countries, OPEC+, on Sunday made an unexpected 1.1-million-barrel per day cut to production to support prices and reduce global inventories, raising the cost of oil and adding inflationary pressure as the Fed and other central banks raise interest rates to slow their economies to check rising prices.

United States of America data pulls US Dollar lower

The US data on Monday added to the narrative that the Federal Reserve is near the end of its rate-hike cycle. March Manufacturing ISM dropped 1.4pts in March to 46.3, its lowest reading since May 2020. ´´A weakening trend has been in place since May last year (56.1), but recent banking turmoil may have dented confidence further,´´ analysts at ANZ Bank said. 

´New orders fell to 44.3 vs 47.0. Manufacturing is one of the most rate-sensitive sectors of the economy as goods like autos are primarily bought on credit. There continues to be encouraging news on goods inflation. Supplier delivery times fell 0.4 to 44.8, its lowest level since March 2009, and the prices sub-index fell 2.1pts to 49.2.´´

Federal funds futures are now pricing in a 60% chance of another 25 basis-point (bp) rate hike by the Fed in May, down around 5% on the back of today´s manufacturing data. Moreover, futures traders have also factored in a pause in June and rate cuts by December. Traders will now await the Services data tomorrow. ´´We look for the ISM Services index to retreat after showing signs of stabilization at a still-firm level of ~55 in Jan-Feb,´´ analysts at TD Securities said. 

The US Dollar moved down to test below 102 the figure, DXY, while the US 10-year note was down 3.9 basis points to 3.432%. The two-year note was down 2.1 basis points to 4.007%.

Nonfarm Payrolls on the cards

Looking ahead, the focus this week will be on Friday's Nonfarm Payrolls jobs report, although many markets will be closed for the Easter holiday.

´´US Nonfarm Payrolls payrolls likely stayed firm at a still above-trend pace in March, though slowing from stronger prints in Jan-Feb,´´ the analysts at TD Securities explained. 

´´We also look for the Unemployment Rate to stay unchanged at 3.6%, and wage growth to print a firm 0.3% MoM.´´

Gold technical analysis

As per the pre-market open weekly Gold price analysis, Gold, Chart of the Week: XAU/USD bulls remain in control, the Gold price indeed rallied:

Prior Gold price analysis

We have a bullish pennant on the daily and 4-hour charts:

Gold price update

The Gold price bulls are back in the market after an anticipated drive from around the supporting area. The Gold price bulls need to commit at this juncture to get and stay above $2,010.