Gold Price Forecast: XAU/USD needs to reclaim $1,975 to unleash further upside

Gold price is seeing renewed demand early Thursday, trading back above $1,960 amid a fresh selling in the US Treasury bond yields. Meanwhile, a steady recovery in the United States Dollar (USD), in the wake of tepid risk sentiment, appears to be limiting the Gold price rebound, thus far.

Gold price remains at the mercy of risk trends, Fedspeak

Investors turned risk-averse in the Asian session on Thursday after China’s property market concerns resurfaced, following the release of disappointing Chinese Fixed Asset Investment data. The main factor behind the cautious mood is the uncertainty surrounding the US Federal Reserve (Fed) interest rate outlook. The softer US Consumer Price Index (CPI) reinforced expectations that the Fed interest rate cuts are coming earlier than expected next year.

However, the above-forecast US Retail Sales data and cooling factory-gate inflation seen on Wednesday brought the Fed’s ‘higher interest rates for longer’ narrative back on the table, supporting the US Dollar while capping the upside attempts in Gold price. Retail sales, which are adjusted for seasonality but not inflation, fell 0.1% in October from the prior month, the US Commerce Department reported Wednesday. The estimate was for a drop of 0.3% in the reported period. Markets now believe that Fed could refrain from cutting interest rates on strengthening signs of an economic 'soft landing'.

Meanwhile, the US Treasury bond yields are feeling the heat from increased demand for safe-havens such as the US government bonds, keeping the buoyant tone intact around the non-yielding Gold price.

Looking ahead, Gold traders will take cues from the mid-tier US weekly Jobless Claims data and a slew of speeches from Fed policymakers.

Gold price technical analysis: Daily chart

The 21-day Simple Moving Average (SMA) at $1,975 remains a tough nut to crack for Gold buyers.  

However, the 14-day Relative Strength Index (RSI) remains above the midline, keeping Gold buyers hopeful.  

Daily closing above the 21-day SMA at $1,975 is needed for a sustained upside toward the November 6 high of $1,993, above which the $2,000 mark will be retested.   

Conversely, retracements from higher levels are likely to challenge initial demand around $1,960, below which the $1,950 psychological level.

The 200-day SMA at $1,936 could offer strong support to Gold optimists.