Gold Price Forecast: XAU/USD drops to fresh two-month low near $1,940 after US data

• Gold price came under renewed bearish pressure on Thursday.
• First-quarter US GDP growth revised higher to 1.3%. 
• 10-year US Treasury bond yield is up more than 1% near 3.8%.

Gold price turned south and dropped to its weakest level since late March slightly below $1,945 on Thursday before staging a modest rebound. As of writing, XAU/USD was down 0.55% on the day at $1,945.

US yields rise on strong data

The US Bureau of Economic Analysis announced that it revised the annualized Gross Domestic Product (GDP) growth for the first quarter to 1.3% from the advance estimate of 1.1%. Additionally, the US Department of Labor's weekly report revealed that there were 229,000 initial claims for unemployment benefits in the week ending May 20, much lower than the market expectation of 245,000.

Boosted by the upbeat macroeconomic data releases, the benchmark 10-year US Treasury bond yield gained nearly 1% and reached 3.8% for the first time since the second week of March, weighing on the inversely-correlated XAU/USD.

According to the CME Group FedWatch Tool, markets are currently pricing in a less than 60% probability of the US Federal Reserve leaving its policy rate unchanged in June, compared to nearly 80% earlier this week.

Later in the session, April Pending Home Sales and Kansas Fed Manufacturing Activity data for May will be featured in the US economic docket. Investors will continue to pay close attention to fresh developments surrounding the debt-limit negotiations as well.

Technical levels to watch for