Gold Price Forecast: XAU/USD buyers stay hopeful whilst above the $1,900 mark

Gold price remains on the back foot but within Monday’s trading range.
US Dollar recovers ground, as sentiment turns sour amid China and Middle East worries.
Gold price could stay supported above $1,900 amid bullish RSI, ahead of US Retail Sales data.

Dhwani Mehta FXStreet

Gold price is trading on the back foot early Tuesday, having opened below the key $1,923 resistance level. Despite the renewed weakness in Gold price, it remains well within Monday’s trading range.

US Retail Sales, Fedspeak and Middle East updates in focus

The main catalyst behind the latest leg down in Gold price is the return of the risk-off flows, which are reviving the safe-haven demand for the US Dollar. Persistent concerns surrounding the Chinese property market, with risks of Country Garden's entire offshore debt being in default if Tuesday payment is not made.

Meanwhile, the Hamas-Israel conflict continues to remain the main cause for concern, weighing on the investors’ sentiment. Wall Street rallied overnight, as investors cheered the US and its allies’ diplomacy efforts to contain the Middle East war, as Israel President Netanyahu and US Secretary of State Antony Blinken enter talks while US President Joe Biden is seen traveling to Israel on Wednesday.

However, in absence of any encouraging news from the Netanyahu-Blinken meeting, which ran for more than seven hours, is sending jitters across the financial markets. Further, investors stay in a cautious mood ahead of this week’s key earnings reports for the third quarter from the United States.

The US Treasury bond yields are extending their recovery, aiding the rebound in the US Dollar at the expense of Gold price, despite dovish comments from Philadelphia Fed President Patrick Harker, who said that "we should not at this point be thinking about any increases" in interest rate.

In the day ahead, the focus now remains on the top-tier US Retail Sales data, which is expected to show a drop to 0.3% in September. Apart from the data, Gold traders will closely scrutinize comments from several Fed policymakers, including John Williams, Michele Bowman, Tom Barkin and Neel Kashkari.

Additionally, the incoming updates on the Middle East conflict will continue to dominate risk sentiment, affecting the US Dollar valuation alongside the Gold price action.

Gold price technical analysis: Daily chart

The Gold price is consolidating the correction from three-week highs of $1,933 so far this Tuesday, with selling pressure intact below the key 100-Daily Moving Average (DMA) at $1,923.

The immediate support is seen at the previous day’s low of $1,908, below which the confluence of the round figure and flattish 50 DMA at $1,900 will be tested.

If the 50 DMA fails to hold up, the Gold price retracement could extend toward the 21 DMA at $1,880.

With the 14-day Relative Strength Index (RSI) indicator, however, holding comfortably above the midline, Gold buyers are likely to find bids at lower levels.

So long as the abovementioned strong support of $1,900 remains intact, Gold price is primed to tale on the key 200 DMA at $1,930.

Ahead of that, the 100 DMA at $1,923 will challenge the bearish commitments. Further up, the three-week high of $1,933 could be retested en-route the September 20 high of $1,947.

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Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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