Gold Price Forecast: XAU/USD recovery, likely to be challenged around $4,470

Gold (XAU/USD) is trading higher on Thursday, returning to levels above $4.400 after bouncing from three-week lows near $4,280 on Wednesday. The precious metal is drawing support from a weaker USD, as ADP employment data disappointed and New York Federal Reserve (Fed) President John Williams tamed rate hike expectations, but Fed tightening bets remain solid, and bulls are likely to face significant resistance at $4,470.

US Data released on Wednesday revealed that private employment rose 38K in August, the weakest reading since January and well below the 47K increase expected. 

Apart from that, New York Federal Reserve President John Williams said that rising bond yields are due to a solid economy, rather than to inflation fears, and suggested that the central bank should “wait and see” before taking decisions on interest rates. This cooled hopes of an immediate rate hike, although futures markets are still pricing a 60% chance of a 25 basis point hike at September's meeting, according to the CME’s FedWatch Tool.

Technical Analysis: Gold bulls have significant resistance ahead

XAU/USD has bounced up from lows and is trading returning to the $4,430 area, but keeps a mildly bearish near‑term tone following an impulsive reversal from last week's highs near $4,700. Momentum indicators are in neutral territory, with the daily Relative Strength Index (14) at 52 and the Moving Average Convergence Divergence (MACD) below zero, which shows that the bullish impulse is fragile.

Gold bulls are likely to be tested at the August 31 high, near $4,470, and, above here at the key 200‑day Simple Moving Average (SMA) at $4,533, which closes the path to last week's high, at $4,690. On the downside, a break of the August 14 low in the $4,310 area confirms a "Head and Shoulders" pattern, and adds pressure towards the August 6 low of $4,220 and the late July lows near $4,000.