Gold Price Forecast: XAU/USD sits near one-year peak, around $2,020 level ahead of US data

• Gold price oscillates in a narrow band just below its highest level since March 2022.
• Bets for an imminent Fed rate-hike pause and a softer risk tone benefit the XAU/USD.
• Rebounding US bond yields helps revive the USD demand and caps any further gains.

Gold price is seen consolidating its recent gains to the highest level since March 2022 and oscillating in a narrow trading band through the first half of the European session. The XAU/USD currently trades just above the $2,020 level and seems poised to build on this week's strong rally from the $1,950 area.

Expectations for an imminent Fed rate-hike pause lend support to Gold price

Growing acceptance that the Federal Reserve (Fed) ) is nearly done with its inflation-fighting interest rate hikes add credence to the positive outlook for the non-yielding Gold price. In fact, the markets are now pricing in an even chance of a 25 bps lift-off at the next Federal Open Market Committee (FOMC) meeting in May and the possibility of rate cuts by end-December. The bets were reaffirmed by Tuesday's weaker macro data from the United States (US), showing that job openings in February dropped to the lowest in nearly two years.

Looming recession risks further benefit the safe-haven XAU/USD

This was seen as the first sign that the Fed's efforts to cool the labor market may be having some impact. Apart from this, the disappointing US Factory Orders data pointed to slowing economic growth and lifted bets for an imminent pause in the rate-hiking cycle. This, in turn, tempers investors' appetite for riskier assets, which is evident from a generally softer tone around the equity markets and further contributes to driving some haven flows towards Gold price. That said, a modest US Dollar (USD) strength acts as a headwind for the XAU/USD.

Rebounding US bond yields and a modest US Dollar strength cap gains

The US Treasury bond yields gain some positive traction following the overnight slump and assist the USD to bounce off its lowest level since early February touched earlier this Wednesday. This, in turn, is holding back bulls from placing aggressive bets around the US Dollar-denominated Gold price. Traders also seem reluctant and prefer to move to the sidelines ahead of the release of the closely-watched US monthly employment details - popularly known as the NFP report - on Friday, warranting some caution before positioning for further gains.

Traders look to macro data from United States for some impetus

Heading into the key data risk, traders on Wednesday will take cues from the US economic docket, featuring the ADP report on private-sector employment and ISM Services PMI, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to Gold price. Apart from this, traders will take cues from the broader risk sentiment to grab short-term opportunities. Nevertheless, the fundamental backdrop supports prospects for a further near-term appreciating move for the XAU/USD.

Gold price technical outlook

From a technical perspective, the overnight sustained strength and close above the $2,000 psychological mark could be seen as a fresh trigger for bullish traders. Furthermore, oscillators on the daily chart are holding in the bullish territory and support prospects for additional gains. Some follow-through buying beyond the daily peak, around the $2,028 area, will reaffirm the positive bias and allow Gold price to aim to retest the March 2022 swing high, around the $2,070 region. This is closely followed by the all-time peak, around the $2,074-$2,075 zone, which if cleared will set the stage for a further near-term appreciating move.

On the flip side, any meaningful corrective pullback now seems to find decent support near the $2,000 mark. A further decline is more likely to attract fresh buyers and remain limited around the $1,982-$1,980 horizontal zone. The latter should act as a pivotal point, which if broken decisively might prompt some technical selling and drag the Gold price towards the $1,955 intermediate support en route to the $1,945-$1,944 support.

Key levels to watch