Gold Price Forecast: XAU/USD bulls pause near descending trend-line hurdle

Gold settled with modest losses on Monday, snapping seven successive days of the winning streak to a more than five-month highs. The downtick was exclusively sponsored by a stronger US dollar, which tends to undermine the dollar-denominated commodity. The greenback remained well supported by acceptance for an early policy tightening by the Fed and got an additional boost from upbeat US macro data.

The markets are pricing in the possibility for an eventual Fed rate hike move by July 2022. Moreover, the Fed funds futures indicate a high likelihood of another raise by November amid rising inflationary pressure. It is worth recalling that data released last Wednesday showed that US consumer prices in October surged to the highest level since 1990. The data convinced investors that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation.

The expectations were reinforced by a fresh leg up in the US Treasury bond yields, which further underpinned the greenback and acted as a headwind for the non-yielding yellow metal. On the economic data front, the Empire State Manufacturing Index surpassed consensus estimates and jumped to 30.9 in November from 19.8 previous. This further contributed to the greenback's overnight strong move up, though the cautious market mood helped limit losses for the traditional safe-haven XAU/USD.

Gold managed to find some support ahead of the $1,855 region and edged higher during the Asian session on Tuesday. Retreating US bond yields kept the USD bulls on the defensive and turned out to be a key factor lending some support to the commodity. The uptick, however, lacked bullish conviction amid a generally positive tone around the equity markets. Investors will keep a close eye on a key meeting between US President Joe Biden and Chinese leader Xi Jinping for some meaningful impetus.

Later during the early North American session, traders will take cues from the release of the US monthly Retail Sales figures. The data, along with the US bond yields, will influence the USD price dynamics. Apart from this, the broader market risk sentiment will contribute to producing some trading opportunities around gold.

Technical outlook

From a technical perspective, the recent strong move-up witnessed over the past two weeks or so stalled just ahead of a resistance marked by a downward sloping trend-line. The mentioned barrier extends from September 2020 swing highs and should now act as a key pivotal point for short-term traders. Given that the RSI on the daily chart has moved on the verge of breaking into the overbought territory, it will be prudent to wait for a convincing breakthrough of the trend-line before placing fresh bullish bets. The XAU/USD might then accelerate the momentum and aim to reclaim the $1,900 round figure before eventually darting to June swing highs, around the $1,916-17 region.

On the flip side, any meaningful pullback below the $1,850 level would now be seen as a buying opportunity. This, in turn, should help limit the downside near the $1,834-32 strong horizontal resistance breakpoint. Failure to defend the mentioned support levels might trigger aggressive long-unwinding trade and turn gold prices vulnerable to slide back towards the $1,800 mark. The $1,818-17 region and the $1,808-06 zone could act as intermediate support levels on the way down.