Gold Price Forecast: XAU/USD stays softer below $1,680 hurdle, US Retail Sale eyed

Gold price (XAU/USD) remains pressured around $1,662 during Friday’s Asian session, reversing the previous day’s bounce off a fortnight low, as the US dollar traces firmer Treasury yields to rebound ahead of the key consumer-centric data from the US.

US 10-year Treasury yields remain firmer around 3.96% after snapping a two-day downtrend to poke the October 2008 levels. The firmer bond coupons portray the market’s recession fears and rush towards the risk-safety but failed to propel the US dollar the previous day.

It should be noted that the Japanese and Chinese policymakers’ ignorance of the International Monetary Fund’s (IMF) push for higher rates also should have weighed on the XAU/USD prices. In doing so, the yellow metal ignores the People’s Bank of China (PBOC) Governor Yi Gang’s readiness for strong stimulus.

The bullion prices marked a notable recovery from the lowest levels in a fortnight the previous day after a third consecutively softer US Consumer Price Index (CPI) jostled with the 40-year high Core CPI and drowned the US Dollar Index (DXY) despite hawkish Fed bets. Talking about the data, the DXY dropped 0.70% to 112.45 by the end of Thursday’s North American session. It’s worth noting that the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.

Amid these plays, Wall Street closed firmer but the S&P 500 Futures print mild losses by the press time.

Moving on, the US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October will be crucial for clear directions. Also important will be the covid updates from China and chatters of market intervention by the Chinese and Japanese policymakers, not to forget political pessimism in the UK.

To sum up, XAU/USD has more reasons to ward off the previous day’s bounce than the stimulus news from China that challenge the bears.

Technical analysis

Gold prices are likely to remain downbeat while considering the multiple failures to cross the 100-EMA, as well as the sluggish and RSI retreat.

That said, the 23.6% Fibonacci retracement level of the August-September downside, near $1,651, offers immediate support to the bright metal. However, a three-week-old horizontal support area surrounding $1,640-42, could stop the XAU/USD bears before directing them to the yearly low of $1,614.

Meanwhile, recovery moves need not only to cross the 100-EMA hurdle of $1,680 but the 200-EMA resistance of $1,692 to convince the buyers. Following that, the $1,700 and the monthly high near $1,730 will be in focus.

Gold: Four-hour chart

Trend: Further weakness expected