Gold Price Analysis: XAU/USD consolidates in a range just below multi-week tops

• Gold was seen oscillating in a narrow trading band through the Asian session on Friday.
• Rebounding US bond yields underpinned the USD and capped the upside for the metal.
• Expectations for ultra-low interest rates, inflationary concerns should help limit losses.

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses, around the $1,765 region during the Asian session on Friday.

A combination of diverging factors failed to assist the precious metal to capitalize on the previous day’s strong move to multi-week tops, instead led to a subdued/range-bound price action. The US dollar found some support after a slew of positive US economic data released on Thursday indicated that the recovery is well on track. The USD got an additional boost from a solid rebound in the US Treasury bond yields, which, in turn, capped the dollar-denominated commodity.

The Commerce Department reported that Retail Sales surged 9.8% in March as against consensus estimates pointing to a 5.9% growth. This marked the best figure since May 2020. Adding to this, the closely watched Retail Sales Control Group, which has a larger impact on US GDP, surpassed expectations and increased 6.9% during the reported month. Separately, regional manufacturing indices and Weekly Jobless Claims also came in better than market expectations.

That said, expectations that the Fed will keep interest rates low for a longer period continued extending some support to the non-yielding yellow metal and should limit deeper losses. Meanwhile, the ultra-low interest rates globally and the unprecedented fiscal stimulus has been fueling speculations about an uptick in inflationary pressure. This was seen as another factor that benefitted the XAU/USD, which is often considered as a hedge against inflation.

From a technical perspective, the overnight move beyond a strong horizontal support breakpoint now turned resistance near the $1,760-65 region added credence to a bullish double-bottom formation near the $1,677-76 region. The set-up supports prospects for a further near-term appreciating move. Hence, any meaningful dip could now be seen as a buying opportunity and act as a tailwind for the XAU/USD amid a relatively thin US economic docket on Friday.

Technical levels to watch