Gold Price Forecast: XAU/USD stays depressed as upbeat United States data propel US Dollar

• Gold Price holds lower ground at 1.5-month low, eyed third weekly loss.
• United States Producer Price Index (PPI) bolsters hawkish Federal Reserve bets and fuels US Treasury bond yields, US Dollar.
• Mixed updates on major XAU/USD consumers, US-China tension adds to the downside pressure.
• No major data/events ahead of next week’s Fed Minutes.

Gold price (XAU/USD) braces for the third consecutive weekly loss as it holds lower grounds near $1,835 during early Friday morning. The major catalyst for the yellow metal’s latest losses could be linked to the United States economics which renew hawkish bias for the Federal Reserve (Fed). Also weighing on the XAU/USD could be the headlines surrounding India and China, as well as a lack of major data/events ahead of the next week’s Minutes of the latest Federal Open Market Committee (FOMC) monetary policy meeting.

United States data weigh on Gold price

Upbeat statistics from the United States have recently pushed back the calls for the Federal Reserve’s (Fed) policy pivot. That said, the latest FEDWATCH read from Reuters signals that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. The same allows the US Treasury bond yields and the US Dollar to remain firmer and weigh on the Gold price.

Among the latest US data, Producer Price Index (PPI) for January gained major attention as it jumped the most since June with 0.7% MoM figure. Also positive was the improvement in the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. Alternatively, a slump in the Housing Starts for January and the Philadelphia Fed Manufacturing Survey for February seemed to have put a floor under the Gold price.

That said, the US 10-year Treasury bond yields rose to the highest levels in 2023 with the latest print of 3.86% while its two-year counterpart also printed mild gains to end the day around 4.64%, making rounds to the highest levels since November 2022. With this, the US Dollar Index (DXY) refreshed a six-week high around 104.23 before retreating to 104.03 by the day’s end.

XAU/USD bears cheer India, China news

Other than the  Federal Reserve concerns, the mixed headlines surrounding the Gold imports from India and China, as well as the latest geopolitical tension between the US and China, also seems to weigh on the XAU/USD price. It should be noted that India and China are the world’s leading Gold consumers.

As per the latest World Gold Council (WGC) data, China's Gold imports increased by 64% year-on-year last year, totaling up to 1,343 mt of gold, the highest level since 2018.

On the other hand, Reuters quoted an anonymous source on Thursday to mention that India's Gold imports plunged 76% in January from a year earlier to a 32-month low, as record high domestic prices dented physical demand.

Elsewhere, US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. “I think the last thing that Xi wants is to fundamentally rip the relationship with the United States and with me," said US President Biden per Reuters.

Smooth run for Gold sellers ahead of Federal Reserve Minutes

Apart from what’s already mentioned above, a lack of major data and events ahead of the next week’s Monetary Policy Meeting Minutes for the Federal Open Market Committee’s (FOMC) latest action also seems to keep the Gold bears on the driver’s seat. The reason could be linked to the majority of the US data that has put a floor under the hawkish Fed expectations.

Gold price technical analysis

Gold price remains depressed below a two-week-old descending trend line, previous support, as well as a downward-sloping resistance line from February 02. Adding strength to the downside is the metal’s sustained trading below the 200-bar Simple Moving Average (SMA).

It’s worth noting that the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator join the downbeat Relative Strength Index (RSI) line, placed at 14, to suggest a slower grind toward the south.

With this, the Gold price decline towards two-month-old horizontal support, near $1,820 by the press time, appears imminent. However, the quote’s further downside will need a strong catalyst to break the stated key support and aim for the $1,800 threshold.

Alternatively, a convergence of the aforementioned support-turned-resistance and an 11-day-old descending trend line offers strong resistance to the Gold price around $1,845, a break of which could allow the XAU/USD to pare recent losses and challenge the 200-SMA level of near $1,892.

In a case where the Gold price remains firmer past $1,892, the $1,900 threshold will be important to watch for further guidance.

Gold price: Four-hour chart

Trend: Further downside expected