Gold Price Forecast: XAUUSD clings to 50DMA before the next push higher toward $1,700

Gold price is moving back and forth in a tight range below the multi-week highs of $1,683, as bulls gather strength before resuming the uptrend. However, a sense of caution prevails, as investors prefer to stay on the sidelines ahead of the critical Consumer Price Index (CPI) release from the United States later in the week.

China’s growth worries offer support to the US Dollar

In the meantime, China slowdown worries, in the face of a big slump in the country’s exports, and the hawkish US Federal Reserve (Fed) outlook compel investors to remain wary, allowing the US Dollar (USD) to stage a tepid rebound while limiting the bullish attempts in Gold price. Mounting growth worries in China are overshadowing any optimism seen on a potential reopening of the economy in 2023, with analysts and industry experts hopeful the Chinese government could consider relaxing covid measures early next year.

Rising US Treasury yields weigh on Gold price

The ongoing uptrend in the US Treasury yields across the curve also keeps XAUUSD buyers on the back foot. The yields on the United States government bonds saw a positive start to the week, with the benchmark 10-year US rates advancing above the 4.20% level. Hawkish remarks from Richmond Federal Reserve (Fed) President Thomas Barkin on Monday underpinned the sentiment around the yields. Barkin said that the US central bank will “persist” in its efforts to bring high inflation under control. “Our rate and balance sheet moves take time to bring inflation down, but the Fed will persist until they do. One of the key lessons from the 70s was not to declare victory prematurely, he noted.

The United States inflation data to offer a fresh impetus

The economic data from the United States continues to remain data-light, leaving Gold price at the mercy of the risk trends and US Dollar price action, as well as, sentiment around the yields. Investors refrain from placing big bets on the USD, awaiting Thursday’s critical US inflation data for fresh hints on the Federal Reserve’s rate hike outlook. Markets are pricing a 56% probability of a 50 bps December Fed rate increase. If the US inflation overshoots expectations, it could revive bets of a super-sized Fed lift-off next month, rendering negative for the non-interest-bearing Gold price.

United States Mid-term election coming up

Gold traders also see the United States Mid-term election on Tuesday, as a cause for pause. The outcome of the election will determine whether US President Joe Bien and his Democratic Party will hold control of Congress, which could spur moves across the financial markets, eventually impacting the US Dollar valuations alongside the bright metal. According to the latest Ipsos poll, President Biden's public approval rating slipped to 39%. The polls also suggested a Republican majority in the House of Representatives and Senate. Meanwhile, former US President and Republican, Donald Trump, said that "I'm going to be making a very big announcement on Tuesday, Nov 15 at Mar-a-Lago in Palm Beach, Florida." Markets are speculating that the announcement could be that he is running for the Presidential race in 2024.

Gold price technical outlook: Daily chart

After Friday’s descending triangle formation-led big breakout, Gold price has entered into a phase of upside consolidation while defending the bearish 50-Daily Moving Average (DMA) at $1,673.

So long as the abovementioned barrier is held, the bullish potential remains intact for the bullion, with a retest of Friday’s high at $1,683 likely to pave the way toward the $1,700 threshold.

The 14-day Relative Strength Index (RSI) is holding flat above the midline, supporting the recent rally in Gold price.

On a firm break below the 50DMA, sellers will target the triangle resistance-turned-support at $1,658. Further south, the horizontal 21DMA at $1,653 could come to the rescue of bulls.