Gold Price Forecast: XAUUSD pulback could provide opportunity to reclaim $1,800

• Gold price is retreating from three-month highs as US Dollar stages a comeback.   
• Federal Reserve Governor Waller’s comments lift the US Dollar with the Treasury yields.
• Gold price appears a ‘Buy the dips’ trade, Federal Reserve speakers will be closely eyed.

Gold price has kicked off the week on the wrong footing, retreating from three-month highs of $1,772, as investors stay cautious amid the latest crypto market debacle, China’s rescue policies and the latest remarks from the United States Federal Reserve (Fed) Governor Christopher Waller.

Federal Reserve’s Waller saves the day for US Dollar and Treasury yields

The US Dollar lost nearly 4% following the Consumer Price Index (CPI) data release from the United States last Thursday. The US CPI rose 7.7% YoY, down from 8.2% in September and much below the 8.0% expected. The CPI accelerated by only 0.4% on the month, down from 0.6% in September and core figures rose 0.3% vs. the 0.5% expected. The US Dollar sell-off extended alongside a risk rally on Friday and the gauge hit the lowest level in three months, as the top-tier data from the United States heightened expectations that the Federal Reserve will slow down its pace of tightening, with a 50 basis points (bps) rate hike almost sealed in for December.

However, on Sunday, Federal Reserve Governor Christopher Waller’s warning came to the rescue of the US Dollar, as it propelled the US Treasury yields sharply higher. Waller made it clear that the Federal Reserve was not softening its fight against inflation, adding that they “will need to see a run of CPI reports to take a foot off the brake.” The Fed Governor also highlighted, “The signal was to pay attention to the endpoint not the pace of rate increases, and until inflation slows the endpoint is "a ways out.”

In reaction to the above comments, the US Treasury yields attempt a bounce, lifting the US Dollar across the board at the expense of the non-interest-bearing Gold price. The benchmark 10-year US yields are up 1.80% at 3.895 while the US Dollar index is testing the 107.00 level once again, as of writing.

Focus on meeting between China’s President Xi and United States President Biden

Amid a cautious market mood and a broad US Dollar comeback, Gold traders have shifted their attention toward the highly-anticipated meeting between China’s President Xi Jinping and US President due later this Monday at 09:30 GMT on the sidelines of the Group of 20 Summit. It will be the first in-person meeting between leaders of the world’s biggest economies since the pandemic emerged. High tensions loom between the United States and China over Russia’s invasion of Ukraine, US curbs on chip exports to China and the status of Taiwan. Bloomberg reported, citing American officials, “President Biden seeks to prevent US-China ties from deteriorating further in a meeting with Chinese leader Xi Jinping on Monday.” 

Investors stay nervous ahead of the top-level talks, seeking safety in the US Dollar while limiting the bright metal’s recent winning streak. The Xi-Biden meeting could intensify risk-aversion, fuelling a further corrective upside in the American Dollar across the board. Meanwhile, the light economic calendar will leave the speeches from the Federal Reserve policymakers on the limelight, as investors continue assessing the US Consumer Price Index data and the Fed rate hike bets.

Markets also digest reports that China is planning its most sweeping economic package to rescue the domestic real estate market mired in a record slowdown and deepening liquidity crunch. This comes after China reduced the quarantine time for international travelers by two days, which is seen as a major shift in the country’s strict zero-Covid policy.

Gold price technical outlook: Daily chart

Gold price is pulling back after witnessing a stellar rally over the past week. The retreat comes as the yellow metal fails to sustain above the August 25 peak at $1,766.

The immediate support is now seen at Friday’s low of $1,747, below which a sharp drop toward the September 12 high at $1,735 will be in the offing.

The bullish 14-day Relative Strength Index (RSI) has turned south after probing the overbought territory, justifying the pullback in the Gold price.

If the upside regains traction, then Gold bulls could recapture the abovementioned resistance at $1,766, making another attempt to test the three-month highs at $1,772.

The next relevant target for Gold buyers is seen at the confluence of the bearish 200-Daily Moving Average (DMA) and the August top near the $1,805 mark.