The current trend for the gold price (XAU/USD) is expected to be weak, and the price could fall below $1,970.00 as the USD Index recovers. The US Dollar Index has risen due to the Federal Reserve’s plan to raise interest rates by 25 basis points on Wednesday, causing a significant impact on the gold price. If it breaks the major support level of $1,970.00, the precious metal could experience a significant fall.
The US ISM Manufacturing PMI data is also expected to affect the USD Index, which is expected to remain active in the coming days. The economic data is expected to show growth, indicating that manufacturing activities are contracting for the sixth consecutive month.
The positive news of JP Morgan and PNC submitting their final bids for the First Republic Bank in Federal Deposit Insurance Corporation (FDIC) auction has eased US banking worries, which has reduced the appeal for the Gold price. Moreover, the New Orders data that indicates forward demand is seen expanding, which could lead to higher prices in the future.
Despite the Federal Reserve’s plan to raise interest rates, consumer spending in the US economy appears to be resilient. Employment Cost Index (Q1) has also jumped by 1.2%, which indicates that the labor market conditions are good, and the Federal Reserve has no other option but to continue paddling interest rates.
Gold technical analysis:
From the past week, the gold price has been consolidating in a narrow range of $1,971-2,021, and investors are eagerly waiting for the monetary policy by the Federal Reserve for a decisive move. The upward-sloping trendline from March 22 low at $1,934.34 is supporting the gold bulls.
The 20-period Exponential Moving Average (EMA) at $1,990.28 is showing no significant impact on the gold price, indicating a lackluster performance. The Relative Strength Index (RSI) (14) is on the verge of slipping into the bearish range of 20.00-40.00, which could activate the bearish momentum.