Gold Price Forecast: XAU/USD bulls retreat from six-month high on firmer United States Treasury bond yields
|- Gold price struggles to reverse the latest retreat from multi-day high.
- China eases Covid-linked activity restrictions, revises up Gross Domestic Production forecasts to back XAU/USD bulls.
- Uptick in United States Treasury bond yields underpin US Dollar rebound and challenge Gold buyers amid holiday season.
- Geopolitical fears surrounding Russia also challenge XAU/USD upside.
Gold price (XAU/USD) seesaws around $1,813 after reversing from the fresh high since June as traders seek more clues to entertain traders during the holiday-thinned season on early Wednesday. The yellow metal renewed a multi-day high amid optimism surrounding China but the run-up in the United States Treasury bond yields seemed to have probed the XAU/USD bulls afterward.
China lures the Gold buyers
China’s easing of the Coronavirus-linked activity restrictions joined an upward revision to the 2021 Gross Domestic Production forecast to favor Gold bulls amid a sluggish holiday season.
That said, China mentioned that it would stop requiring inbound travelers to go into quarantine from January 8, the National Health Commission (NHC) said late on Monday, a major step towards loosening its curbs, per Reuters. The news joins China’s National Bureau of Statistics (NBS) upward revision to the 2021 GDP growth to 8.4% from 8.1% previous readings also favor the Gold buyers.
Given the strong positive connection between the Gold price and China, due to the dragon nation’s heavy usage of the metal, the recent positive headlines surrounding Beijing favor Gold buyers.
United States Treasury bond yields challenge XAU/USD upside
Contrary to the China-linked optimism, a run-up in the United States Treasury bond yields challenges Gold buyers amid hawkish hopes from the Federal Reserve (Fed). “The yield on 10-year Treasury notes was up 10.4 basis points at 3.851% after hitting a five-week high of 3.862%,” said Reuters while also adding that the yield on the 30-year Treasury bond was up 11.5 bps at 3.937%.
On the same line, Reuters also mentioned that the shorter-dated bonds saw their yields fall from their highs of the day after an auction of $42 billion in two-year notes, which was viewed as strong by analysts, with a high yield of 4.373% and demand for the debt at 2.71 times the notes on sale.
Geopolitical fears test the Gold buyers
Apart from the firmer US Treasury bond yields, fears surrounding Russia, China and North Korea also challenge Gold buyers. Russian President Vladimir Putin recently signed a decree to ban oil exports to the countries accepting the price cap. On the same line could be Moscow’s ongoing tussles with Kyiv. On the same line could be the US-China tension and the North-South Korean problems, recently triggered by a drone.
Light calendar highlights sentiment details for fresh impulse
Given the lack of major data/events, Gold traders should pay attention to the risk catalysts for clear directions. In doing so, the headlines surrounding China, US Treasury bond yields and Russia should be watched carefully.
Gold price technical analysis
Gold price marked another defeat from the $1,825 horizontal resistance, despite refreshing a six-month high while ticking up to $1,833. However, firmer prints of the Relative Strength Index (RSI), placed at 14, joined the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator, to keep XAU/USD bulls hopeful of another battle with the $1,825 hurdle.
During the Gold’s successful trading beyond $1,825, June’s top near $1,880 and late March swing low around $1,890 can test the XAU/USD buyers before offering them the $1,900 threshold.
Alternatively, a one-week-old ascending support line, close to $1,803, precedes the $1,800 round figure to restrict the short-term Gold downside.
Also acting as the key challenges for the Gold sellers is an upward-sloping support line from early December, close to $1,780, as well as the 200-SMA support near $1,778.
Overall, firmer oscillators join the higher-low formation of the Gold price to keep buyers on the table.
Gold price: Four-hour chart
Trend: Bullish
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