Gold Price Forecast: XAU/USD awaits US data to defend bulls past $1,910 support confluence

Gold Price (XAU/USD) holds onto the week-start strength despite retreating from a 13-day high during the late hours of Monday, edging higher to around $1,920 amid the initial Asian session on Tuesday. In doing so, the XAU/USD cheers the softer US Dollar and Treasury bond yields amid optimism surrounding China, one of the world’s biggest Gold customers. It’s worth noting that the cautious mood ahead of the key United States data, especially after the Federal Reserve (Fed) Chairman Jerome Powell’s emphasis on data dependency, prod the Gold buyers of late.

Gold Price benefits from softer yields, cautious optimism

Gold Price remains on the front foot after a stellar weekly rebound even as the upside momentum softens of late. That said, the XAU/USD cheers China-inspired risk-on mood, as well as the downbeat United States Treasury bond yields and the US Dollar, to lure buyers.

US Treasury bond yields marked the first weekly loss in five by reversing from the highest level since 2007 the last week. That said, the US Dollar Index (DXY) dropped on Monday after posting the six-week uptrend even as the United States mid-tier activity data improves.

On Monday, the US Dallas Fed Manufacturing Business Index improved to -17.2 for August versus -21.6 expected and -20.0 prior. It’s worth noting that the details of the activity gauge were mixed as the new orders and prices paid for raw materials increased but the finished good prices eased.

The downbeat Treasury bond yields and the Greenback could be linked to the absence of any hawkish surprises from the Federal Reserve (Fed) and other central major bankers during last week’s Jackson Hole Symposium. It’s worth noting that Fed Chair Jerome Powell showed readiness for rate hikes while pushing back rate cut bias during his key Jackson Hole speech.

However, the policymaker also highlighted the data dependency and hence increased the importance of the incoming statistics, as well as amplified uncertainty about the US central bank’s next moves, which in turn directed the market players toward the Gold. It should be noted that Cleveland Fed Bank President Loretta Mester favored a rate hike, even if not in September, while the odds of witnessing an increase in the Fed rate in November improved of late, per the CME’s FedWatch Tool.

Additionally, China’s halving of the stamp duty on stocks trading joined a Wall Street Journal (WSJ) piece suggesting Chinese Communist Party Chairman Xi Jinping’s indirect push for stimulus to favor market sentiment and the Gold Price upside.

Elsewhere, firmer equities and receding fears of recession also allow the Gold buyers to remain hopeful.

United States data will direct XAU/USD moves

While the aforementioned catalysts allow the Gold Price to edge higher, a slew of top-tier United States data stands ready to challenge the XAU/USD moves. Among them, the US Conference Board’s (CB) Consumer Confidence Index for August, expected 116.2 versus prior 117.00, will be the first to challenge the Gold buyers in case of printing the upbeat outcome.

It should be observed that the second-tier US housing data and JOLTS Job Openings for July could also entertain the XAU/USD intraday traders. However, major attention will be given to the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for July and Nonfarm Payrolls (NFP) for August. Additionally, inflation data from the Eurozone and the growth numbers for India, as well as China’s official Purchasing Managers Indexes for August, will offer extra directions to the Gold traders.

Gold Price Technical Analysis

Gold Price remains between 50 and 200 Exponential Moving Average (EMA) while struggling to keep the buyers on board, especially amid the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator.

However, firmer conditions of the Relative Strength Index (RSI) line, placed at 14, join the XAU/USD’s sustained trading beyond the $1,910 confluence to keep the bulls hopeful. That said, the 50-EMA joins a one-week-old rising trend line to highlight the stated $1,910 level as the short-term key support.

It’s worth noting that a convergence of the 200-EMA and 38.2% Fibonacci retracement of late July-August downside, near $1,925, restricts the short-term Gold Price upside.

Following that, a horizontal area comprising multiple tops marked since early August, close to $1,930, will act as the final defense of the XAU/USD sellers.

On the contrary, a clear downside break of the $1,910 support confluence could quickly drag the Gold Price toward the $1,900 round figure before highlighting the monthly low of around $1,884 for the bears.

Overall, the Gold Price is likely to stay on the recovery mode but the road to the upside appears long and bumpy.

Gold Price: Daily chart

Trend: Limited upside expected