Gold Price Forecast: XAU/USD remains capped below the $2,000 barrier, Chinese PMI data looms

Gold price (XAU/USD) consolidates below the $2,000 psychological mark during the early Asian session on Monday. The correction of the US Dollar (USD) and a pullback in US Treasury bond yields lend some support to the yellow metal. Gold price currently trades around $1,996, up 0.07% for the day.

Meanwhile, the US Dollar Index (DXY), the value of the USD relative to a basket of global currencies, drops to 106.20 after retracing from the weekly high of 106.70. The US Treasury bond yield moves a little, with the 10-year Treasury bond yield hovering around 4.90%.

Last week, the Federal Reserve (Fed) Chair Jerome Powell affirmed that the Fed would maintain the rate steady at its upcoming meeting on Wednesday, but whether they will hold the rate for December will depend on the incoming data. Powell added that the additional rate hike is possible if high economic growth and a labor shortage continue. This, in turn, might cap the upside of gold. It's worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for precious metals.

Furthermore, investors will monitor the Chinese PMI data on Tuesday. China’s Manufacturing PMI is estimated to remain in expansionary territory by growing to 50.2, while Non-Manufacturing PMI is expected to rise to 51.8. The stronger-than-expected data might boost the gold price as China is the world's largest gold producer and consumer.

Looking ahead, the US Housing Price Index and Consumer Confidence are due on Tuesday. The attention will shift to the Fed interest rate decision and the Press Conference on Wednesday will be closely watched. Traders will take cues from the events and find trading opportunities around the gold price.