Gold Price Forecast: XAU/USD loses the momentum above $1,950 following mixed Chinese data

Gold price struggles to gain traction and extends Friday’s retracement slide from the $1,965 area. The precious metal currently trades around $1,950 in the Asian session following the mixed Chinese data.

That said, the upbeat US consumer confidence helped the US Dollar recover above its lowest level since April 2022, dragging gold prices lower on Friday.

The preliminary reading of the University of Michigan's (UoM) Consumer Confidence Index rose to 72.6 from 64.4 in June, beating the market's expectation of 65.5. Additionally, US consumer prices climbed by 3.0% year on year, down from 4.0% previously, and the Producer Price Index (PPI) increased by 0.1%, down from 0.9% prior. Market participants anticipate the Federal Reserve (Fed) to be less hawkish in tightening monetary policy following an expected interest rate hike in the July 26 meeting. This, in turn, could be the headwind for the US Dollar and might cap the downside for gold. 

On the Chinese front, the latest National Bureau of Statistics (NBS) data reported that the Chinese Gross Domestic Product (GDP) came in at 6.3% annually, lower than predicted at 7.3% and 4.5% previously. At the same time, Industrial Production YoY increased by 4.4% from 3.5% the previous year, above the consensus of 2.7%. 

Additionally, Retail Sales fell to 3.1% YoY from June, down from 12.7% previously and 3.2% expected by the market. The mixed economic figure helps gold to limit the loss. However, investors remain focused on the Chinese data. It’s worth noting that the fear of an economic slowdown in China could have a negative impact on the gold price as China is the biggest gold consumer.

The Fed enters its blackout period ahead of the July 25-26 meeting. Market participants will take cues from the US data. The Empire State Manufacturing Index and Retail Sales MoM from June will be due later this week. These data will play a key role in influencing the near-term US Dollar price dynamic and help determine the next direction for gold prices.