Gold Price Forecast: XAUUSD eyes a retest of the $1,800 mark, US data in focus

Risk-off flows dominated throughout Tuesday’s trading, as the record-high inflation rate in the Euro area offset the China reopening optimism, as it rekindled global growth worries. Central banks remain on the rate hike track to fight inflation, accentuating economic slowdown worries.

This narrative played out well, reviving the safe-haven demand for the US dollar while downing the USD-price gold price. A sharp recovery rally in the US Treasury yields on rising inflation expectations also deepened the pain in the non-yielding bright metal. An unexpected jump in the US CB Consumer Confidence also added to the upside in the dollar at gold’s expense.

Gold Price is extending losses for the third straight day this Wednesday, heading further towards the $1,800 mark, as the US dollar finds fresh demand amid a souring market mood. Inflation-linked growth risks continue to loom amid brewing geopolitical tensions between US-China over Taiwan while Russia’s nuclear drills also spooked investors’ sentiment. The dollar remains the preferred safe-haven asset while the yields preserve the previous gains.

Looking ahead, a fresh batch of US macro releases will be closely followed for fresh hints on the economy, with the ADP jobs and ISM Manufacturing PMI standing. The downbeat data could add to the slowdown worries, which will bode well for the greenback and knock XAUUSD down further. The speeches by the Fed policymakers will also draw attention after Fed Governor Christopher Waller turned out more hawkish on Monday.

Gold Price Chart: Daily chart

Gold Price slumped on Wednesday closed below the critical 200-Daily Moving Average (DMA), then at $1,840, signaling more pain ahead.

Tuesday’s sell-off saw the price extend firmly below the rising trendline support at $1,860 and later below the 21-DMA at $1,847.

The 14-day Relative Strength Index (RSI) is pointing south below the midline, suggesting that there is more room for the downside.   

Bears now remain positioned to take on the May 18 low of $1,807, although the $1,820 round figure could come to the rescue of gold bulls before.

On the flip side, recapturing the 200-DMA support-turned-resistance on a daily closing basis is critical to initiating any meaningful recovery.

The next relevant resistance is seen at the bearish 21-DMA, above which the previous day’s high of $1,857 could be challenged.