Gold price (XAU/USD) trades with a positive bias on Thursday amid the absence of top-tier economic data releases at mid-week. However, multiple headwinds, such as the firmer US Dollar (USD) and the hawkish comments from the US Federal Reserve (Fed) are likely to cap the upside of the precious metal in the near term.
On the other hand, the growth in global gold demand was mainly driven by strong over-the-counter market investment, persistent central bank purchasing, and rising demand from Asian buyers, including China and India, per the WGC’s most recent report. Furthermore, the risk-averse environment and the uncertainties surrounding geopolitical tensions in the Middle East might boost traditional safe-haven assets like gold.
Gold traders await some fresh catalysts. The US weekly Initial Jobless Claims is due on Thursday. Also, San Francisco Fed President Mary Daly, in the dovish wing of the US central bank, is set to speak later in the day. The dovish remarks from Fed officials might cap the downside of the gold price for the time being.
Daily Digest Market Movers: Gold price remains firm amid the multiple headwinds
Boston Fed President Susan Collins said it will take longer than previously thought to bring inflation down to the 2% target, emphasizing that the rate will likely stay higher for longer.
New York Fed president John Williams and Minneapolis Fed president Neel Kashkari also indicated that they favor holding rates at current levels for longer.
Investors have priced in a nearly 55% chance of a quarter-percentage-point rate cut from the Fed in September, down from 85% before the US employment report last week, according to CME’s FedWatch Tool.
The first reading of the University of Michigan Consumer Sentiment Index is expected to drop from 77.2 in April to 76.0 in May.
Hamas has agreed to a draft ceasefire agreement that is “far from meeting Israel’s demands, according to Israeli Prime Minister Benjamin Netanyahu.
The People’s Bank of China (PBoC) increased its gold reserves by 60,000 troy ounces in April, extending its streak of consecutive purchases to 18 months.
Technical Analysis: Gold price stays bullish in the longer term
The gold price edges higher on the day. The yellow metal’s long-term outlook remains positive, with XAU/USD trading above the key 100-day Exponential Moving Average (EMA) on the daily chart.
In the near term, the gold price has been caught in a descending trend channel since mid-April. The consolidative theme remains intact as the 14-day Relative Strength Index (RSI) hovers around the 50-midline.
The initial support level for the precious metal is seen near the $2,300 psychological mark. The next contention level is located at the lower limit of a descending trend channel of $2,260. Extended weakness could drag XAU/USD to a low of April 1 at $2,228, followed by the $2,200 round level.
If we see enough gold demand, the yellow metal could head for a high of May 6 at $2,232. Further north, gold may draw in enough buyers to test the upper boundary of a descending trend channel at $2,345. The additional upside filter to watch is the $2,400 round mark, en route to an all-time high near $2,432.
Source: Fxstreet
