Gold Price Forecast: XAU/USD battles to conquer $1,800, not a good sign for bulls

Gold edged higher on Thursday, albeit continued with its struggle to find acceptance or build on the momentum beyond the $1,800 round-figure mark. A sharp fall in the US Treasury bond yields prompted some US dollar selling and extended some support to the dollar-denominated commodity. In fact, the yield on the benchmark 10-year US government bond tumbled to the 1.30% threshold following a strong $24 billion auction of 30-year bonds. Apart from a weaker USD, worries about a global economic slowdown – amid the fast-spreading Delta variant – further contributed to buying in the safe-haven XAU/USD.

That said, expectations that Fed will begin rolling back its massive pandemic-era stimulus sooner rather than later acted as a headwind for the non-yielding yellow metal. The market speculations were further reinforced by Fed Governor Michelle Bowman's comments on Thursday, saying that the central bank was close to announcing the start of tapering. This was in line with hawkish comments by various Fed officials this week, who back the plan to trim $120 billion in monthly bond purchases later this year. This, in turn, kept a lid on any meaningful gains for gold, at least for the time being.

On the economic data front, the US Weekly Initial Jobless Claims recorded the biggest decline since late June and dropped to the lowest level since the pandemic struck in March 2020. This offered further evidence that a sharp slowdown in hiring during August was due to labour shortages rather than weak demand for workers. Nevertheless, the commodity ended the day with modest gains and traded with a mild positive bias through the Asian session on Friday. A softer tone around the greenback continued lending some support, though a modest uptick in the US bond yields capped the upside.

Market participants now look forward to the release of the US Producer Price Index for some impetus later during the early North American session. This, along with the US bond yields, could influence the USD price dynamics. Apart from this, the broader market risk sentiment might also produce some trading opportunities around the XAU/USD on the last day of the week.

Short-term technical outlook

From a technical perspective, the commodity's inability to climb further beyond the $1,800 mark warrants some caution for bullish traders. This makes it prudent to wait for some follow-through strength back above the very important 200-day SMA, around the $1,810 region, before positioning for any further appreciating move. The XAU/USD might then accelerate the momentum and aim to challenge a strong barrier near the $1,832-34 supply zone. A convincing breakthrough the mentioned hurdle has the potential to lift the commodity further towards the $1,853 intermediate resistance en-route the $1.868-70 region.

On the flip side, the $1,784-82 region now seems to have emerged as immediate support ahead of the $1,775-74 horizontal zone. A convincing break below will be seen as a fresh trigger for bearish traders and set the stage for a deeper retracement to the $1,750 level. The downward trajectory could further get extended towards the $1,729-28 region before the metal eventually drops to the $1,700 round figure.