Gold Price Forecast: XAU/USD retreats towards $1,890 as United States employment, activity data loom

Gold Price (XAU/USD) remains pressured around $1,915 amid early Thursday morning in Asia, after fading the four-day uptrend, reversing from 21-DMA. In doing so, the XAU/USD not only braces for the key horizontal support but also takes clues from China concerns, as well as hawkish expectations from the Federal Reserve (Fed). That said, the XAU/USD pullback ignores softer United States data while tracing upbeat US Treasury bond yields.

Gold Price retreats amid China, Federal Reserve concerns

Gold Price bears the burden of China-inflicted fears while posting the first daily loss in five. That said, China’s top-tier housing players like Shimao Group, as well as the government-backed Sino-Ocean Group, feel the heat of the first fall in housing sales after four-month advances. Further, the headlines surrounding the US-China ties and fresh trade sanctions, as well as the downbeat Chinese PMIs, weigh on the risk appetite and the XAU/USD price.

On Wednesday, downbeat prints of China’s Caixin Services PMI for June, to 53.9 versus 57.1 prior, joined the escalating fears of the US-China tension amid fresh warnings of further trade restrictions from Beijing to weigh on the sentiment and prices of the riskier assets.

That said, China’s Global Times and former Vice Commerce Minister flagged hardships for the US IT companies, as well as metal players. Earlier on Wednesday, China announced abrupt controls on exports of some gallium and germanium products, effective from August 1. The dragon nation’s latest retaliation is in reaction to the US curb on AI chips’ shipments to Beijing.

Elsewhere, the Federal Open Market Committee (FOMC) Minutes for the June meeting stated that almost all members agreed to a pause in the rate hike trajectory while some policymakers showed an inclination for a July rate hike of around 0.25%. The Fed members also noted a reduction in bank stress, improvement in economic conditions and substantial improvement in bond issuance.

Talking about the data, US Factory Orders reprints 0.3% MoM growth for May versus 0.8% expected. The official publication also mentioned that the new orders for manufactured durable goods in May rose for the third consecutive month. Earlier in the week, the US ISM Manufacturing PMI and S&P Manufacturing PMI came in softer and propelled the Gold Price.

Amid these plays, the markets almost priced in the June Fed rate hike by 0.25% and weighed on the Gold Price while the Wall Street benchmarks closed in the red and the US Treasury bond yields, as well as the US Dollar Index (DXY) rose.

Looking ahead, the risk catalysts will be crucial to watch for clear directions of the Gold Price. Among them, China headlines and recession woes will be in the spotlight. Additionally, the US ISM Services PMI and ADP Employment Change for June will be crucial as both of them will help determine Friday’s all-important Nonfarm Payrolls (NFP) and affect the XAU/USD prices.

Gold Price Technical analysis

Gold Price retreats from the 21-DMA, around $1,934 by the press time, to pare the first weekly gain in four.

Adding strength to the pullback move are the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as the below-50 conditions of the Relative Strength Index (RSI), placed at 14.

With this, the XAU/USD appears well-set to prod the $1,900 round figure but a six-month-old horizontal area, around $1,890-85, appears a tough nut to crack for the Gold bears.

In a case where the Gold Price drops below $1,985, the 200-DMA support of around $1,863 and early March swing high near $1,858 may act as the final defenses of the buyers.

On the contrary, a daily closing beyond the 21-DMA hurdle of $1,934 isn’t an open ticket to the Gold buyers as a downward-sloping resistance line from June 02, close to $1,945 at the latest, can challenge the XAU/USD upside.

Even if the Gold Price crosses the $1,945 hurdle, bulls need to remain cautious below the previous monthly high of around $1,985.

Overall, the Gold price is likely to witness a short-term downside ahead of the top-tier United States data.

Gold Price: Daily chart

Trend: Limited downside expected