Gold Price Forecast: XAU/USD rebounds ahead of United States data, Federal Reserve talk

• Gold price bounces off short-term key support but struggles to gain upside momentum.
• Downbeat United States Purchasing Managers’ Indexes favored Gold buyers.
• Hawkish Federal Reserve talk challenges XAU/USD recovery moves.
• US Durable Goods Orders, Fed’s preferred inflation gauge eyed for clear directions.

Gold price (XAU/USD) defends the bounce off a short-term key support confluence around $1,793 as traders await the United States (US) statistics for clear directions. The metal price witnessed the biggest weekly loss in four in the last as the global central banks, including the Federal Reserve (Fed) appeared hawkish. However, the US Purchasing Managers’ Index (PMI) for December appeared to be weak and helped the Gold price to end the week on a positive note.

Gold bears return on hawkish central banks

Be it the Federal Reserve (Fed) or the European Central Bank (ECB), not to forget the Bank of England (BOE) and the Swiss National Bank (SNB), the majority of the key central banks announced 50 basis points (bps) of rate hikes the last week. Although the rate lift was smaller than the previous moves, the policymakers’ readiness to defend the higher rates for the longer time seemed to have teased the Gold sellers.

The same could be sensed in the latest comments from Federal Reserve Bank of Cleveland President Loretta Mester and New York Federal Reserve President John Williams. That said, New York Fed President William said that it was possible for the FOMC to hike more than the terminal rate projected in the dot plot. On the same line, Cleveland Fed President Loretta Mester said her estimate for interest rates is higher than that of her colleagues and the central bank needs sustained tight policy to defeat inflation.

United States Purchasing Managers’ Indexes teased XAU/USD buyers

Gold price recovered from short-term important support on Friday on the downbeat prints of the United States (US) Purchasing Managers’ Indexes (PMIs) for December. That said, the US S&P Global Manufacturing PMI dropped to 46.2 from 47.7 in November, as well as the market expectation of 47.7. Further, S&P Global Services PMI declined to 44.4 in December's flash estimate from 46.2 in November and market expectation of 46.8.

Receding optimism over China teases Gold sellers

The gold price earlier cheered easing in China's Zero-Covid policy but the softening of the activity data from China and doubts over the recently declining COVID-19 numbers keep XAU/USD buyers on the edge. “China President Xi Jinping and his senior officials pledged to shore up China's battered economy next year as the deaths of two veteran state journalists highlighted the worsening spread of COVID-19 in the capital Beijing,” per Reuters.

The news adds that the reports of the deaths came as China set out urgent plans on Friday to protect rural communities from the virus as millions of city-dwellers plan their Lunar holidays, starting on Jan. 22, for the first time in years. But the excitement that met the policy U-turn allowing them to travel has cooled amid concerns that China is unprepared for the coming wave of infections, and the blow it could deliver to the world's second-largest economy.

US Durable Goods Orders, Federal Reserve’s preferred inflation gauge in focus

To confirm the weekly loss in the Gold price, traders will pay attention to Friday’s United States (US) Durable Goods Orders for November, expected 0.0% versus an upwardly revised 1.1% prior. Also important will be the Core Personal Consumption Expenditures (PCE) - Price Index for the said month, expected 4.6% YoY versus 5.0% prior. The PCE Price Index is known to be the Federal Reserve’s (Fed) preferred gauge of inflation and hence gains the major attention of Gold traders. Should the scheduled inflation data appear firmer, together with the upbeat Durable Goods Orders, the hawkish Fed talks could be materialized and signal further weakness of the metal. However, the year-end inaction may restrict the metal’s heavy momentum.

Gold price technical analysis

Gold defends the previous day’s bounce off a five-week-old ascending trend line and the 21-day Exponential Moving Average (EMA), around $1,775 by the press time, as it licks the wounds after the biggest weekly loss in a month.

In doing so, the yellow metal again approaches the $1,808-10 resistance confluence including the seven-month-old horizontal region and the 50% Fibonacci retracement level of the Gold’s April-September downside.

However, bearish signals from the Moving Average Convergence and Divergence (MACD) indicator join the sluggish Relative Strength Index (RSI), located at 14, to challenge the metal’s further recovery.

Even if the XAU/USD crosses the $1,810 hurdle, the 61.8% Fibonacci retracement level, also known as the “Golden Ratio”, around $1,852, will precede the June 2022 peak surrounding $1,880 to challenge the Gold buyers.

Alternatively, a clear downside break of the $1,775 support confluence could quickly drag the Gold price towards a convergence of the 50-day EMA and 100-day EMA near $1,745. However, tops marked in September and October, respectively around $1,735 and $1,730, could challenge Gold buyers afterward.

Overall, Gold’s latest rebound from important support appears elusive unless crossing the $1,810 hurdle.

Gold price: Daily chart

Trend: Further weakness expected