Gold Price Forecast: XAU/USD eases below $1,825 hurdle amid firmer US Dollar, hidden bullish RSI divergence

• Gold price retreats from six-month high, snaps two-day uptrend while printing mild losses.
• Hidden bullish RSI divergence keeps XAU/USD buyers hopeful amid mixed sentiment.
• US Treasury yields underpin US Dollar rebound despite holiday-thinned market participation.
• Risk catalysts are in focus amid light calendar.

Gold price (XAU/USD) retreats to $1,810 as it pares the latest gains around the six-month high, flashed the previous day, while snapping a two-day winning streak during early Wednesday morning in Europe. In doing so, the yellow metal justifies the US Dollar rebound, as well as receding optimism surrounding China amid the sluggish trading session amid the holiday season.

That said, the US Dollar Index (DXY) prints 0.12% intraday gains around 104.35 by the press time as it defends the previous day’s recovery moves. In doing so, the greenback’s gauge versus the six major currencies also justifies the recently mixed US data, as well as mixed concerns surrounding the Fed’s next moves.

Talking about the data, US Good Trade Balance for November improved to $-83.3B versus $98.8B prior but the US S&P/Case-Shiller Home Price Indices for October dropped to 8.6% YoY versus 9.7% expected and 10.4% previous readings. It’s worth noting that the previously mixed readings of the US inflation and growth figures raised doubts about the Federal Reserve’s (Fed) hawkish move, especially after the US central bank appeared cautiously optimistic over the rate hikes in its latest monetary policy meeting.

It should be observed that the receding optimism surrounding China could also be held responsible for the XAU/USD retreat, due to the dragon nation’s status as the world’s largest commodity user. Although China announced multiple measures to open national and international boundaries in a rush to convey the easing of COVID-19 fears, the US doubts the moves and probes the risk-on mood. That said, the dragon nation initially ruled out the quarantine requirement for inbound travelers before stating that the nation will resume citizens' applications for ordinary passports for tourism and visits abroad from January 8, 2023. Even so, a US Official mentioned, per Reuters, that the US government may impose new COVID-19 measures on travelers to the United States from China over concerns about the "lack of transparent data" coming from Beijing.

Amid these plays, the 10-year Treasury bond yields remain sidelined near 3.85%, after refreshing the six-week high the previous day, whereas the S&P 500 Futures remain indecisive while tracking the mixed closing of the Wall Street benchmarks.

Looking forward, the US Pending Home Sales for November which holds the market consensus of 0.6% versus -4.6% previous readings, will decorate the calendar but major attention will be given to the US Treasury bond yields and headlines surrounding China for fresh impulse.

Gold price technical analysis

Gold price portrays a bullish RSI divergence on the daily formation despite the latest pullback from the two-week-old horizontal resistance area surrounding $1,825.

That said, the yellow metal portrays the higher lows on price but the RSI (14) indicator fails to justify firmer quotes and prints lower lows on the indicator.

As a result, the metal’s further upside appears likely, which in turn highlights the $1,825 resistance.

A clear upside break of the $1,825 key hurdle could direct Gold price towards June’s top near $1,880 and late March swing low around $1,890 before flashing lights on the $1,900 mark.

Meanwhile, the $1,800 round and the 21-DMA support near $1,795 restricts short-term downside of the Gold price, a break of which won’t hesitate to direct XAU/USD bears towards the monthly low near $1,765.

Gold price: Daily chart

Trend: Bullish