Gold Price Forecast: XAU/USD bears attack $1,775 support with eyes on PMIs

Gold price (XAU/USD) holds lower ground near $1,777-76 support during early Friday morning in Asia. In doing so, the precious metal remains on the seller’s radar ahead of the key PMIs data from the UK, Europe and the US for December.

That said, a broad gamut of 0.50% rate hikes by the US Federal Reserve, Bank of England, Swiss National and the European Central Bank raised fears of higher rates across the board and weighed on the market sentiment, as well as the Gold price. Also challenging the risk appetite and favoring the XAU/USD bears were the central banks’ concerns suggesting their readiness to the higher rates for longer, as well as sour forecasts surrounding inflation and growth.

It should be noted that the risk-aversion drowned the Wall Street benchmarks and favored the US Treasury bond yields, which in turn allowed the US Dollar Index (DXY) to print the biggest daily gain in 10 weeks.

In doing so, the greenback’s gauge versus the six major currencies paid little heed to the mixed data at home as the US Retail Sales flashed -0.6% MoM figure in November versus 0.1% expected and 1.3% prior. Further, manufacturing survey details from Philadelphia Fed and New York Fed came in disappointing for the said month whereas Industrial Production eased in November and the Jobless Claims also dropped for the week ended on December 09.

Elsewhere, downbeat statistics from China, one of the world’s key Gold consumers, also drowned the XAU/USD prices. China’s Retail Sales slumped to -5.9% in November versus -3.6% expected and -0.5% prior while Industrial Production came in at 2.2% compared to 3.3% market forecasts and 5.0% previous readings.

To sum up, renewed fears of higher rates and recession weigh on the Gold price while preliminary readings of the December month PMIs for the UK, Europe and the US will be crucial to determine the metal’s further downside.

Gold price technical analysis

Gold price remains pressured as sellers poke a five-week-old ascending trend line. The bearish bias recently gained support from a downside break of the 100-SMA, around $1,780 by the press time.

Also keeping the XAU/USD sellers hopeful are the bearish MACD signals and the RSI (14).

That said, the Gold bears need volition from the $1,775 immediate support to aim for the 200-SMA level surrounding $1,750.

Following that, the early November swing low near $1,700 could lure Gold sellers.

Alternatively, recovery moves need to stay beyond the 100-SMA level surrounding $1,780 to convince intraday buyers. Even so, an upward-sloping resistance line from early November, close to $1,825, could challenge the Gold buyers.

Overall, Gold is likely to witness further downside but the $1,775 level probes bears.

Gold: Four-hour chart

Trend: Further downside expected