Gold Price Forecast: XAU/USD bears lacking conviction ahead of US Retail Sales, FOMC

Gold price (XAU/USD) tumbled over 1% on Monday and hit the lowest levels since May 17 at $1845, as sellers sped up entries on a sustained break below the critical daily trendline support at $1879. The solid rally in the US Treasury yields, amid expectations that the Fed Chair Jerome Powell may begin taper talks at Wednesday’s FOMC press conference, smashed gold price. However, the US dollar’s mixed price action against its major rivals and a pre-Fed cautious market tone helped gold stage a decent comeback to near the $1865 region.

In Tuesday’s trading so far, gold price is consolidating the previous losses, finding some support from the retreat in the US Treasury yields. The Asian equities trade mixed to lower, as investors refrain from riskier assets, in anticipation of the FOMC decision. If risk-aversion deepens going forward, the US dollar could likely see a revival in the safe-haven bids, which will accelerate the decline in gold price. The focus now shifts towards the US Retail Sales data, with a disappointment likely to ease the inflationary concerns, boosting odds for the Fed’s tapering announcement while rendering gold-negative.  

Gold Price Chart - Technical outlook

Gold: Daily chart

After a decisive daily closing below the two-and-a-half months-long rising trendline support, then at $1879, gold price is attempting a tepid bounce this Tuesday.

Therefore, the bulls could look to retest the trendline support, now at $1884, if the recovery momentum gathers steam in the day ahead.

Ahead of that the $1870 round number and Monday’s high of $1878 needs to get cleared.

Meanwhile, if the daily lows of $1858 give way, the downside could resume towards the 200-Daily Moving Average (DMA) at $1840 cannot be ruled out.

The 14-day Relative Strength Index (RSI) is seeing an upturn, supporting the upside attempts in gold price.

However, the moves are likely to remain limited ahead of the US economic data releases.