Gold Price Forecast: Bull-bear tug-of-war to extend ahead of US Retail Sales

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  • XAU bulls take a breather after $200 rebound from three-week lows.
  • US dollar cheers China data disappointment, firmer US yields. 
  • Gold to find support ahead of US Retail Sales data, US-China trade talks.

Gold (XAU/USD) extended Wednesday pullback and recovered nearly $200 from three-week lows to end Thursday higher at $1953.60. The yellow metal rose as high as $1966 amid negative sentiment on Wall Street but failed to hold onto higher levels. The rise in the US Treasury yields diminished the demand for the yieldless gold and pushed it lower. Yields on US Treasuries rose after a poor auction of 30-year bonds. The US dollar benefited from higher yields and upbeat US Jobless Claims data, further, limiting the upside attempts in the precious metal. However, rising coronavirus fears globally combined with a delay in the US fiscal stimulus kept the floor under gold prices.

Heading into the critical US Retail Sales report this Friday, gold treads water around $1950 region. The Asian stocks falter amid a disappointment in the Chinese activity numbers while the greenback holds onto the recent gains. A weaker-than-expected rise in the US Retail Sales data could re-ignite economic recovery concerns and down the dollar, which could possibly bode well for gold. Meanwhile, the bright metal could also benefit, as investors are likely to remain risk-averse amid the US fiscal impasse and ahead of the key US-China trade talks, scheduled on Saturday.

Short-term technical perspective  

Gold: Hourly chart


XAU/USD ranges within a potential rising wedge formation on the hourly, clinging firmly onto the solid support at $1946.50, which the convergence of the rising trendline and upward-sloping 21-hourly Simple Moving Average (HMA).

The hourly Relative Strength Index (RSI) inches slightly higher at 54.80, holding well above the midline. This suggests that the price could bounce back to test the bearish 100-HMA at $1964.50.

Acceptance above that level is critical to confirm the bullish reversal from the recent brutal sell-off.  Further north, the rising trendline resistance $1972 will be next on the buyers’ radars.

A fresh rally could be triggered on a break above the latter, opening doors for a test of the horizontal 200-HMA barrier at $1997.

To the downside, the bearish continuation pattern will get confirmed on an hourly closing below the abovementioned critical support at $1946.50.

The next downside target is aligned at $1933, the horizontal 50-HMA, which is the level to beat for the bears.

Sellers will then eye a test of $1907 support on its way to the round figure of $1900.

Gold: Additional levels to consider