Gold prices dropped by 1.55% this week, hitting their lowest level since early April. Despite positive fundamentals, the downward correction is showing potential for further extension, leaving traders on edge. The XAU/USD technical outlook for the upcoming days and weeks remains uncertain.
The recent decline in gold prices, settling just above the $2,300 threshold, came as a surprise to many traders. The market had anticipated a stronger response given falling U.S. bond yields. However, Fed Chair Powell’s dovish stance on rate hikes and the weaker-than-expected U.S. jobs report failed to boost the precious metal.
Looking ahead, economic vulnerabilities, the Fed’s easing plans, and the downtrend in the U.S. dollar should theoretically support precious metals. However, gold’s detachment from fundamentals and its already significant rally this year could lead to further deflation or sideways trading.
The U.S. economic calendar for the upcoming week lacks major events, suggesting that volatility may remain contained for now. However, the release of the April consumer price index later this month could potentially trigger sharp price swings based on any surprises in the data.
Bulls will need to fiercely protect the $2,280 support level, as a breach could lead to further losses towards the $2,260 Fibonacci level. On the upside, breaking above $2,355 could pave the way for a rally towards $2,375. Despite the uncertainty in the market, traders will need to closely monitor key levels and technical indicators to make informed decisions.
