Gold Price Forecast: XAU/USD drops towards 200-SMA retest as yields underpin US Dollar rebound

• Gold price holds lower ground after reversing from one-week high, snaps three-day winning streak.
• US Treasury bond yields refresh multi-month highs amid inflation, rate hike fears.
• China-linked optimism fades ahead of G20; US data, Fed talks also weigh on sentiment and XAU/USD price.

Gold price (XAU/USD) seesaws around the intraday low of $1,831 during the first loss-making day in four heading into the European session. In doing so, the precious metal justifies the firmer US Dollar and risk-off mood in the market amid a sluggish Thursday.

US Dollar Index (DXY) bounces off a one-week low to 104.60 at the latest, up 0.17% intraday as the greenback bulls trace strong US Treasury bond yields, as well as cheer the sour sentiment amid hawkish Federal Reserve (Fed) talks.

That said, the US 10-year Treasury bond yields rose to the highest levels since early November 2022 by piercing the 4.0% mark, whereas the two-year counterpart rallied to the highest levels since June 2007 by flashing the 4.91% mark at the latest.  The jump in the US Treasury bond yields portrays the market’s fears, which in turn probed bulls on Wall Street and weighed on S&P 500 Futures as of late.

While tracing the key catalysts, upbeat details of the US ISM Manufacturing PMI for February and headlines from the New York Times (NYT) suggesting the US-China likely tension, the Group of 20 (G20) meeting seems to gain major attention. On the same line could be the hawkish Minneapolis Federal Reserve (Fed) President Neel Kashkari, as well as the policymakers of the Bank of England (BoE) and the European Central Bank (ECB).

On the contrary, the recent pick-up in China activity data and upbeat comments from the policymakers of the dragon nation keeps the Gold buyers hopeful. China’s Human Resource Minister recently said, “China's employment will continue to improve this year and remains stable overall.” On Wednesday, China Finance Minister Liu He showed readiness to bolster the nation’s fiscal spending while also mentioning that the foundation of China's economic recovery is still unstable.

Moving on, updates from the G20 could join central bankers’ comments and the second-tier data from the US to entertain the XAU/USD traders.

Gold price technical analysis

Gold price stays depressed after reversing from a three-week-old horizontal resistance area, around $1,844-48. The pullback moves also coincide with the RSI (14) retreat from the overbought territory and bearish MACD signals to keep XAU/USD sellers hopeful.

However, a convergence of the 200 and 50 Simple Moving Averages (SMAs), near $1,827 by the press time, appears to be the key support to challenge the metal’s further downside.

Even if the quote drops below the $1,827 SMA confluence, the previous resistance line from February 09, close to $1,817, can act as the last defense of the Gold buyers.

Alternatively, recovery moves need to cross the $1,848 hurdle to convince XAU/USD bulls to aim for the early February tops surrounding $1,870. Following that, $1,890 and $1,900 could test the upside momentum ahead of directing the Gold price toward the previous monthly peak of $1,960.

Overall, the Gold price remains on the back foot even if the downside seems to have little room. 

Gold price: Hourly chart

Trend: Limited downside expected