Gold Price Forecast: XAU/USD takes a respite, as buyers’ eye $1800 on soft US Dollar

• US Retails Sales smashed forecasts, flashing consumers’ resilience and pressuring the Federal Reserve.
• Industrial Production in the United States showed signs of weakness, justifying 50 bps hikes by the Federal Reserve.
• XAUUSD is neutral-upward biased and can claim $1800 once it regains $1786.

Gold Price creeps lower after testing the weekly high around $1786 on Wednesday following the release of mixed data from the United States, which spurred a risk-off impulse, bolstering the US Dollar (USD). However, XAU failed to capitalize on falling US Treasury bond yields and on Federal Reserve (Fed) speakers expressing that they would slow the pace of tightening, which sent US bond yields plummeting. Hence, XAUUSD is trading at $1772.20, below its opening price.

US Dollar bolstered by an upbeat US Retail Sales report

US equities declined following the release of upbeat economic data for the United States (US). Retail Sales for October grew by 1.3% on a monthly pace, above estimations of 1%, showing consumers resilience amidst a 4-decade inflation period. Delving into the report, Retail Sales for the control group, used on Gross Domestic Product (GDP) calculation, rose by 0.7% MoM against forecasts of 0.3%. Further data from the Federal Reserve (Fed) revealed that Industrial Production (IP) for October in the United States shrank by 0.1% MoM in October, beneath estimates of a 0.2% expansion, the second decline in three months.

Given that Federal Reserve policymakers expressed that interest-rates hikes moderation is appropriate, today’s reports gave mixed signals to the central bank. On one side, further tightening is needed, as growing demand will keep prices elevated, but weakening industrial activity would need support. That said, a slew of Federal Reserve policymakers crossed newswires.

Federal Reserve officials lay the ground for 50 bps hikes

Federal Reserve officials said inflation is too high and higher rates are needed. They added that interest-rate increases could slow down soon, though they emphasized that they need work to do, and “pausing” is not an option. It should be noted that Kansas City Fed President Esther George said it would be hard to lower inflation without triggering a recession, whilst Governor Christopher Waller stated that the higher the policy rate, the stronger the case for slowing to 50 bps hikes.

Gold Price falls albeit a soft US Dollar

Once data was revealed, XAUUSD edged toward the low $1770s, beneath Wednesday’s opening price, while the US Dollar (USD) continued its downtrend. The US Dollar Index (DXY), a gauge of the greenback’s value against a basket of six peers, dives 0.25%, down at 106.306, losing 8.40%, from its recent fall from YTD highs.

Meanwhile, US Treasury bond yields edge lower, a headwind for the USD and a tailwind for XAU. The US 10-year bond yield fell eight bps at 3.690%. Although US nominal bond yields dropped, the US 10-year Treasury Real Yields remained around 1.53%, capping XAUUSD’s rally.

Gold Price Forecast: Technical outlook

The XAUUSD daily chart portrays Gold as neutral-to-upward biased. After retracing from weekly highs around $1786, forming a bearish-harami candle pattern, it could exacerbate a fall below $1767, which, once cleared, could open the door toward $1750, ahead of the 100-day Exponential Moving Average (EMA) at $1712.89. On the other hand, if XAUUSD breaks to new weekly highs above $1786, it could challenge the $1800 figure, immediately followed by the 200-day EMA at $1802.85. A daily close above the latter could send Gold rallying towards June 17 highs around $1857.20.