Gold Price Forecast: XAU/USD could see selling resurgence near $1,680

Gold price is back in the green zone at the start of the week, snapping Friday’s brief pullback from five-day highs of $1,675. The bright metal stood resilient so far this Monday, despite the initial rebound in the US dollar, as the renewed weakness in the Treasury yields helped. But the dollar came under fresh selling pressure and resumed the previous week’s correction amid a return of risk-on flows, as investors cheered reports of UK PM Liz Truss looking to ditch scrapping a 45% tax rate following crisis talks with Chancellor after brutal Tory backlash last week.  The US S&P 500 futures rebounded as much as 0.50% on the above headlines while GBP/USD stormed through the 1.1250 barrier. Earlier in the Asian session, risk sentiment was sapped by weak Asian factory activity data, which accentuated global economic slowdown fears amidst an inevitable central banks’ tightening spree. Despite the two-way price movement in the dollar, the bullion maintained its bid tone while ranging from $1,670-$1660.

Also read: Gold, the Chart of the Week: XAU/USD bears could be about to move in for the kill

XAU/USD snapped a two-week downtrend and closed the week with substantial gains on Friday, as the dollar rally eased off throughout the week. Investors viewed the recent upsurge in the greenback as excessive and resorted to profit-taking ahead of the September US payrolls report. Although the bullion failed to sustain at multi-day peaks of $1,675 and pulled back sharply in intraday trading after the US Core PCE Price Index, the Federal Reserve's preferred gauge of inflation, rose to 4.9% YoY in August vs. 4.7% in July, beating forecasts of 4.7%. Surging inflation bolstered expectations of a 75 bps rate hike by the Fed in November.

Gold price technical outlook: Daily chart

After last week’s recovery rally, Gold price needs a daily close above the bearish 21-Daily Moving Average (DMA) at $1,679.

However, the $1,670 round number and Friday’s high of $1,675 will need clearance first.

The 14-day Relative Strength Index (RSI) is sidelined just below the 50.00 threshold, suggesting that bulls could face a uphil battle and eventually yield into the bearish pressures.

On the downside, the $1,660 level offers strong support to buyers, which if breached will accentuate the bearish pressures towards the September 29 low of $1,642.

All in all, risks remain skewed to the downside for the bright metal so long as it holds below the 21 DMA.