Gold Price Forecast: XAU/USD bulls optimistic as US debt ceiling talks disappoint ahead of CPI

• Gold price remains firmer for the third consecutive day, recently backed by US Dollar retreat.
• US Dollar bears the burden of growing fears of United States default, banking sector woes, ignore hawkish Federal Reserve talks.
• Strong US Consumer Price Index (CPI) can renew hawkish Fed bias and prod the XAU/USD bulls.

Gold price (XAU/USD) cheers the United States policymakers’ inability to offer any welcome signs about the debt ceiling as the yellow metal renews the weekly high to around $2,038 by the press time. In doing so, the XAU/USD also benefits from the softer US Dollar ahead of the all-important US Consumer Price Index (CPI) data for April.

Gold price benefits from pessimism over United States, softer US Dollar

Gold price gains from its haven appeal as markets rush for risk safety amid fears of the US default, especially after the first rounds of extensive debt ceiling talks among the United States policymakers reach a deadlock. US Senate Majority Leader Chuck Schumer conveyed the absence of progress in the key debt-ceiling talks at the White House. Following that, US President Joe Biden called the meeting “productive” and reported that House Speaker Kevin McCarthy said during the meeting that the US would not default on its debt, per Reuters. The news also quotes US House Speaker McCarthy saying that the two sides agreed for their staff to get together this week, and for the principals to meet again on Friday to continue talking.

In this regard, the global rating giant Moody’s recently said, “What once seemed unimaginable now seems a real threat.” The same added to the market’s fears and contributed to the Gold price upside.

Elsewhere, International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas said on Tuesday, “We are a bit concerned about recent banking sector turbulence.” The same could be heard from the Fed's quarterly survey of bank loan officers, released on Monday. The fears of banking fallouts are an additional burden on the US Dollar and an extra flavor to the XAU/USD.

It should be noted that the looming fears of the US default and banking crisis joined softer United States data to prod the US Dollar, despite firmer Treasury bond yields, which in turn allowed the Gold price to remain firmer. That said, the US NFIB Small Business Optimism index dropped to the lowest level since 2013, to 89 in April. However, Federal Reserve Bank of New York President John Williams said, per Reuters, "Fed has not said it's done raising rates."

Against this backdrop, the US Dollar Index (DXY) retreats to 101.60, pausing the two-day winning streak, whereas the US 10-year Treasury bond yields remain sidelined near 3.51% after rising in the last four consecutive days.

US Consumer Price Index can prod XAU/USD bulls

Given the Gold price upside amid a softer US Dollar and jittery markets, the XAU/USD traders will pay close attention to the United States Consumer Price Index (CPI) for April, expected to improve on a monthly basis but remain static on the YoY format. It’s worth noting that a likely softening in the CPI ex Food and Energy, also known as the Core inflation data, may help the Gold buyers to keep the reins.

Also read: Gold Price Forecast: XAU/USD grinds north in a risk-averse environment

Gold price technical analysis

Gold price justifies a firmer Relative Strength Index (RSI) line, placed at 14, and a looming bull cross on the Moving Average Convergence and Divergence (MACD) indicator while picking up bids for the third consecutive day.

That said, the XAU/USD currently aims for the mid-April swing high surrounding $2,048 before approaching the February 2023 peak of near $2,060.

However, the recently refreshed all-time high of around $2,080 and an upward-sloping resistance line from late March, close to $2,088, quickly followed by the $2,100 round figure, can challenge the Gold buyers afterward.

On the contrary, a one-week-old ascending trend line near $2,017 precedes the $2,000 psychological magnet to restrict short-term Gold price downside.

Following that, a convergence of the 200-bar Exponential Moving Average (EMA) and the previous resistance line from the last Wednesday, near $1,989, will be crucial to watch as it holds the key for the XAU/USD’s further downside.

Gold price: Four-hour chart

Trend: Further upside expected