Gold Price Forecast: XAU/USD pares week's loss, consumer-centric data from China, United States eyed

Gold price (XAU/USD) grinds higher towards $1,800 as broad US Dollar weakness and optimism surrounding China favors the metal buyers ahead of the key data from Beijing and the United States. Even so, the bullion remains on the way to printing the first weekly loss in three as it seesaws around $1,790 during the early hours of Friday’s Asian session.

US Dollar fails to trace United States Treasury bond yields and favor Gold buyers

US Dollar Index (DXY) dropped for the second consecutive day on Thursday, paring the first weekly gain in three, even as the benchmark United States 10-year Treasury bond yields recovered from the lowest levels since mid-September. That said, the greenback’s gauge versus the six major currencies remains pressured around 104.80 by the press time.

The DXY losses could be linked to the recently downbeat statistics from the world’s biggest economy.  On Thursday, US Initial Jobless Claims matched 230K market consensus for the week ended on December 02, versus upwardly revised 226K prior. Further, the four-week average also printed 230K figure compared to 229K previous readings. Earlier in the week, the US Goods and Services Trade Balance deteriorated to $-78.2 billion versus $-79.1 billion expected and $-73.28 billion prior. Further, the final readings of the Unit Labour for Q3 eased to 2.4% QoQ versus 3.5% first estimations.

Even so, US Treasury Secretary Janet Yellen said on Thursday that "Recession is not inevitable," while also declining to say whether the dollar had peaked against other currencies.

Optimism surrounding China also propels XAU/USD

China runs down on its Zero-Covid policy and propels the Gold price due to its status as one of the world’s key Gold consumers. On Thursday, Shanghai City Authorities mentioned that they will stop requiring Covid test checks for restaurants or entertainment venues from this Friday. On the same line, the South China Morning Post (SCMP) states that Hong Kong is ‘to ease isolation rules’ for infected travelers, with a release on the fifth day.

Following the announcements, China Premier Li Keqiang said, “Growth will continue amid implementation of optimized pandemic policies.” The policymaker also stated, “Will keep yuan exchange rate basically stable.”

An active day before the key week

After witnessing a few days of inaction and mixed clues, mainly due to a light calendar, Friday could entertain Gold traders with the scheduled top-tier readings from China and the United States.

Firstly, China Consumer Price Index (CPI) is expected to repeat 0.1% MoM figure in November but is likely to ease to 1.0% YoY versus 2.0% previous readings. Further, the Producer Price Index (PPI) could decline to -1.5% compared to -1.3% prior during the stated month.

That said, the preliminary readings of the Michigan Consumer Sentiment Index for December, expected 53.3 versus 56.8 prior, will entertain Gold traders afterward. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for the said month, 3.0% previous readings.

It should be noted that the geopolitical fears emanating from Russia and the latest passage of the bill to help Taiwan with weapons by the US Congress seem to challenge the XAU/USD traders ahead of the key week comprising multiple central bank meetings.

Gold price technical analysis

Gold price portrays a rising wedge bearish chart formation on the four-hour play. However, the firmer Relative Strength Index (RSI) line, placed at 14, as well as bullish signals from the Moving Average Convergence and Divergence (MACD) indicator, keeps the XAU/USD buyers hopeful.

That said, the $1,800 threshold and the weekly high, as well as the monthly peak, surrounding $1,810 appear as the immediate levels that lure the Gold buyers. Though, the upper line of the stated wedge, close to $1,816 at the latest, could question the metal’s further advances.

In a case where the quote rises past $1,816, the odds of witnessing a run-up toward the mid-June high near $1,858 can’t be ruled out.

On the flip side, a convergence of the 50-Exponential Moving Average (EMA) and lower line of the wedge, around $1,777, appears the key support to watch during the fresh declines of the Gold price.

Also acting as an important support is the horizontal area comprising October’s high and late November swing low, close to $1,730-32.

Overall, Gold price grinds higher inside a bearish chart pattern.

Gold price: Four-hour chart

Trend: Limited upside expected