Gold Price Forecast: XAU/USD retreats towards $1,900 as markets doubt strong China growth


  • Gold price extends the week-start pullback from multi-month high.
  • China reports upbeat GDP, Industrial Production and Retail Sales, but NBS comments challenge optimism.
  • Return of full markets underpins US Treasury yields rebound and challenge XAU/USD bulls.

Gold price (XAU/USD) dropped for the second consecutive day after poking the highest levels since April 2022, down 0.20% as sellers kept the reins near $1,910 during early Tuesday.

US Dollar Index rebound from the seven-month low, amid firmer US Treasury bond yields, underpinned the Gold price pullback on Monday. However, the price-negative market sentiment, even after China’s positive economics, seemed to have weighed on the XAU/USD of late.

Regarding the data, China's Gross Domestic Product (GDP) for the fourth quarter (Q4) printed 0.0% QoQ figure versus -0.8% expected and 3.9% prior. Further details suggest that the Industrial Production for December grew 1.3% YoY versus 0.5% market forecasts and 2.2% prior readings. Additionally, Retail Sales improved to -1.8% YoY for December compared to -7.8% consensus and -5.9% prior.

It should be observed, however, that the China National Bureau of Statistics (NBS) mentioned after the data that the foundation for economic recovery is not solid yet.

Also read: China’s NBS: Foundation for economic recovery not solid yet

Other than the NBS comments, the market’s lack of acceptance of the upbeat China data, amid hopes of witnessing a downbeat outcome due to the COVID-19 woes, also seemed to have weighed on the sentiment and the XAU/USD prices. Furthermore, recently positive US sentiment figures and the inflation expectations conveyed on Friday probed the previously dovish bias for the Federal Reserve (Fed) and underpinned a rebound in the US Treasury bond yields.

That said, the S&P 500 Futures print mild losses as it retreats from the monthly high while the US 10-year Treasury yields defend the week-start recovery, up two basis points (bps) near 3.54% by the press time.

Moving on, Gold traders should wait for the second-tier US data like NY Empire State Manufacturing Index for January, expected -4.5 versus -11.2 prior, for clear directions. However, major attention will be given to Wednesday’s US Retail Sales for December, which is expected to be 0.1% YoY versus -0.6% prior.

Gold price technical analysis

A clear downside break of the three-day-old bullish channel favors Gold sellers as they approach the previous resistance line from January 09, close to $1,898 by the press time.

That said, the bearish MACD signals and downbeat RSI (14), not oversold, also keep the Gold bears hopeful.

It’s worth noting that the $1,900 threshold can act as immediate downside support, while the 200-HMA level surrounding $1,878 could probe the XAU/USD bears afterwards.

Alternatively, the stated channel’s lower line, close to $1,923 at the latest, restricts the immediate upside of the XAU/USD.

Following that, an ascending trend line from the last Thursday, near $1,947, could challenge the Gold buyers before directing them toward the April 2022 peak surrounding $1,998.

Gold price: Hourly chart

Trend: Further downside expected

Additional important levels

Overview
Today last price 1910.32
Today Daily Change -4.11
Today Daily Change % -0.21%
Today daily open 1914.43
 
Trends
Daily SMA20 1842.58
Daily SMA50 1797.84
Daily SMA100 1735.86
Daily SMA200 1776.96
 
Levels
Previous Daily High 1929.02
Previous Daily Low 1910.91
Previous Weekly High 1921.96
Previous Weekly Low 1865.22
Previous Monthly High 1833.38
Previous Monthly Low 1765.89
Daily Fibonacci 38.2% 1917.83
Daily Fibonacci 61.8% 1922.1
Daily Pivot Point S1 1907.22
Daily Pivot Point S2 1900.01
Daily Pivot Point S3 1889.11
Daily Pivot Point R1 1925.33
Daily Pivot Point R2 1936.23
Daily Pivot Point R3 1943.44

 

 

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