Gold Price Forecast: XAU/USD’s path of least resistance appears to the upside

• Gold price is consolidating weekly gains above $2,030 early Friday.
• US Dollar licks its wounds alongside the US Treasury bond yields after the dovish Fed pivot.   
• Gold price remains exposed to upside risks amid favorable technicals.  

Gold price is fluctuating between gains and losses while trading in a tight band above the $1,930 level early Friday, as buyers pause to digest this week’s positive developments heading toward the pre-Christmas lull next week.

Gold price set for weekly gain on Fed pivot

Even so, Gold price is on track to book a weekly advance, snapping the previous week’s sharp pullback from all-time highs of $2,144. The Asian side trend in the Gold price can be attributed to a pause in the US Dollar sell-off, as the US Treasury bond yields attempt a tepid bounce. The US Dollar also finds a floor, as the Asian stocks pare early gains, gearing up for the release of the preliminary PMI data from the US and the Eurozone, which will throw fresh insights into the state of the global economy.

The US Dollar is licking its wounds, inflicted by the US Federal Reserve’s (Fed) dovish pivot, with Chair Jerome Powell affirming 2024 interest rate cut expectations. In contrast, the Bank of England (BoE) and the European Central Bank (ECB) on Thursday left the door ajar for further tightening while reinstating that rates will stay ‘higher for longer’.

The US Dollar suffered heavily on Thursday, as the monetary policy divergence between the Fed, the BoE and the ECB came to the fore. The Greenback found some respite from an unexpected rise in the US Retail Sales data and falling Jobless Claims. But the US Dollar reprieve emerged as temporary, as the dovish Fed outlook-led global risk-on rally smashed it’s once again, keeping Gold price elevated near eight-day highs of $2,048.

Looking ahead, the global PMI data will provide fresh trading impetus, as the end-of-the-week flows and profit-taking will likely remain in play, especially after a central banks-dominated volatile week draws to an end.

Gold price technical analysis: Daily chart

Having extended Wednesday’s recovery above the key $2,040-$2,050 supply zone, Gold price failed to find a foothold above the latter on a daily closing basis on Thursday.

With the 14-day Relative Strength Index (RSI) indicator, however, still holding above the midline, the bullish potential appears intact for Gold price so long as it defends the critical short-term 21-day Simple Moving Average (SMA, now at $2,015.

A sustained break below the latter will reopen floors toward a test of the $2,000 threshold, below which the 50-day SMA support at $1,980 will be back in play.

On the flip side, a daily close above the $2,040-$2,050 region is critical to unleashing additional Gold price recovery toward the $2,100 psychological level.