Gold Price Forecast: XAU/USD eyes $1,800 ahead of US Retail Sales/Powell’s speech

Update: Gold prolonged its recent strong rebound from the $1,687 area, or the lowest level since March touched earlier this month and gained traction for the fifth successive session on Tuesday. The momentum pushed the XAU/USD to one-and-half-week tops during the first half of the European session, with bulls now eyeing a move towards reclaiming the $1,800 mark. Disappointing Chinese macro data released on Monday fueled worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery. Apart from this, political tensions in Afghanistan weighed on investors' sentiment and acted as a tailwind for traditional safe-haven assets, including gold.

The flight to safety, along with diminishing odds that the Fed will begin tapering its assets purchases continued exerting pressure on the US Treasury bond yields. This was seen as another factor that benefitted the non-yielding gold and contributed to the ongoing positive move. That said, a modest US dollar strength might hold traders from placing aggressive bulls bets and cap gains for the dollar-denominated commodity. Market participants now look forward to the release of the US monthly Retail Sales data, due later during the early North American session. This will be followed by Fed Chair Jerome Powell's scheduled speech, which might produce some short-term trading opportunities around the XAU/USD.

Previous update: Gold (XAU/USD) eases inside a choppy trading range around $1,790, down 0.10% intraday near $1,785 heading into Tuesday’s European session. The yellow metal rose during the last four days to consolidate the August 08 slump, before a recent pullback.

The sluggish moves could be linked to the US dollar gains and challenges to the market sentiment, led by the coronavirus woes and geopolitical fears.

The US Dollar Index (DXY) rises 0.10% intraday around 92.70, up for the second consecutive day, by the press time. In doing so, the greenback gauge licks its wounds after declining the most since late June on Friday.

Putting safe-haven bids under the USD are the fears that the Delta covid variant will reverse the economic recovery from the pandemic. Although the virus numbers from India, the UK and the US have been a bit easy of late, firmer infections in the Asia–Pacific weigh on the market’s mood. It should be noted that Yahoo News quotes the Scientific Advisory Group for Emergencies (SAGE), the UK government's advisory panel as saying, “A future new coronavirus variant capable of beating the protection given by current vaccines is ‘almost certain’ to emerge.” On the same line were chatters that the US covid cases will jump to the 200,000 levels, marked earlier in 2021, as well as New Zealand’s first COVID-19 case in Auckland.

On a different page, the Taliban’s takeover of Kabul and US President Joe Biden’s recent fears of such activities spreading out of Afghanistan, if not controlled, exert an additional downside burden on the market’s risk appetite.

Elsewhere, the Fed policymakers’ indirect support for tapering and mixed economics adds to the woes of the gold traders.

Amid these plays, the US 10-year Treasury yields remain unchanged around 1.26% whereas the S&P 500 Futures print mild losses at the latest.

Moving on, the US Retail Sales for July, expected -0.2% versus +0.6% prior, will be the key, followed by a speech from Fed Chair Jerome Powell at an online town hall event. Should the consumer-centric figure follow the recently downbeat US economics, gold may have an additional reason to decline.

Technical analysis

Gold struggles for a clear direction inside a bullish chart pattern by the press time.

While a short-term rising channel and a sustained trading beyond 61.8% Fibonacci retracement of July–August fall favors the bulls, a clear break of the key SMAs becomes necessary for the buyers to keep reins.

Hence, in addition to the immediate hurdle surrounding $1,786-87, the 200-SMA level of $1,796, and the upper line of the stated channel close to the $1,801 also challenge the gold buyers.

If at all, gold buyers manage to cross the $1,801 hurdle, the monthly peak surrounding $1,831 will be in focus.

Meanwhile, pullback moves will aim for the $1,780-78 support confluence, including the channel’s lower line and 61.8% Fibonacci retracement level.

However, a sustained break of $1,778 will recall gold sellers targeting $1,750 and the last Tuesday’s swing lows near the $1,700 round figure.

In a case where gold bears remain dominant past $1,700, the yearly bottom surrounding $1,676 will be on their radars.

Gold: Four-hour chart

Trend: Pullback expected