Gold Price Forecast: XAU/USD loses ground below $1,920, US Retail Sales, Chinese data eyed

Gold price (XAU/USD) trades in negative territory for the second consecutive day during the early Asian session on Tuesday. Market participants shrug off the conflict in the Middle East and look for a fresh impetus. The precious gold currently trades near $1,915, down 0.28% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, edges lower to 106.28 after retreating from last week’s high of 106.78. US Treasury yields trade higher, with the 10-year Treasury yield surging to 4.71%. While the YS 2-year stays at 5.10%.

Many Federal Reserve (Fed) officials including Chicago Fed President Austan Goolsbee and Philadelphia Fed President Patrick Harker maintained their dovish stance. Harker stated on Monday that in the absence of some turn in the data Fed should hold rates steady. However, The upbeat US inflation report and higher inflation expectation data last week have prompted investors to price in a possible rate rise by the Federal Reserve (Fed). This, in turn, might lift the US Dollar (USD) and weigh on the gold price. 

The Federal Reserve Bank of New York reported on Monday that the US NY Empire State Manufacturing Index for October dropped to 4.6 from the previous reading of 1.9 rise, above the expectation of a 7.0 decline. Last week, the US Consumer Price Index (CPI) annually and monthly for September came in at 3.7% and 0.4%, respectively. Both figures exceeded the market expectations.

Apart from this, the key Chinese economic data On Wednesday could give a clearer direction to gold price. The Chinese Gross Domestic Product (GDP) for the third quarter, Industrial Production, and Retail Sales will be released on Wednesday. The weaker-than-expected could drag gold price lower as China is the world's largest gold producer and consumer.

On the other hand, the escalating geopolitical tensions between Israel and Hamas could boost the demand for a traditional safe-haven asset like Gold. Early Tuesday, the US Marine Rapid Response force is headed to the waters off the coast of Israel. The rapid response force of 2,000 Marines and sailors is being sent. It will join an increasing number of US warships en route to Israel in an effort to send a deterrent message to Iran and the Lebanese militant group Hezbollah, according to a CNN report.

Gold traders will monitor the US Retail Sales due on Tuesday. The figure is expected to rise 0.2%. On Wednesday, The Chinese GDP for Q3 will be due. The annual growth number is estimated to grow 4.4% while the monthly figure is expected to expand 1.0%. Traders will take cues from these events and find trading opportunities around the gold price.