Gold Price Forecast: XAU/USD looks to $2,700 after Wednesday’s close above $2,670

Gold price flirts with record highs, awaiting US Retail Sales data for next push higher.
The US Dollar retreats after rallying on a Trump victory optimism, as China worries linger.
Gold price’s daily technical setup points to more upside, with $2,700 in sight.

Dhwani Mehta FXStreet

Gold price is consolidating gains near record highs in Asian trading on Thursday, trading in the green for the third day in a row. Gold buyers now look to the US Retail Sales data for the next push higher.

Gold price awaits US data, as China stimulus disappoints

Gold price is capitalizing on a renewed pullback in the US Dollar (USD) across the board even as risk sentiment takes a hit on disappointing China’s property market support measures. China’s Housing Minister announced that Beijing will "increase the credit scale of white-list projects to four trillion" yuan by the end of the year and and help renovate a million homes.

However, these latest measures by China to shore up the struggling sector failed to impress local equities, as the major Chinese benchmark indices trim early gains. Further, China’s economic woes could continue to act as a headwind to Gold price, as the dragon nation is the world’s top yellow metal consumer.

Additionally, a modest uptick in the US Treasury bond yields also check the Gold price upside. Meanwhile, markets are resorting to profit-taking on their USD longs heading into the high-impact economic data release of this week – the US Retail Sales report.

The US Dollar extended its recovery rally into Wednesday on increased expectations that the Republican nominee Donald Trump will likely win the US presidential race, as we remain a few weeks away from the November 5 elections.

The focus has recently shifted toward the US elections, which has largely contributed to the ongoing US Dollar advance, as Trump’s fiscal and trade policies are seen as inflationary and positive for the Greenback.

Meanwhile, a 25 basis points (bps) interest-rate cut by the US Federal Reserve (Fed) in November is a done deal. Therefore, the US Retail Sales data are unlikely to alter these expectations. However, it could impact the market’s pricing of another rate cut in December.

That said, risk trends will continue to play their part in driving the Gold price action alongside US macro news, Fedspeak and Trump optimism.

Gold price technical analysis: Daily chart

Gold price closed Wednesday’s trading above the key $2,670 resistance and flirted with the record high at $2,686.

The 14-day Relative Strength Index (RSI), points north above the midline, suggesting that there is more room to the upside.

A sustained break above the all-time high of $2,686 will trigger a fresh advance to the $2,700 round level.

Further up, buyers could challenge the $2,750 psychological barrier.

On the downside, the immediate support aligns at $2,670, the previous resistance now turned support.

Acceptance below that level will expose sellers to the key 21-day Simple Moving Average (SMA) support at $2,646.

Ahead of that the previous day’s low of $2,659 could test bullish commitments.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.

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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