Gold Price Forecast: XAUUSD hangs near weekly low, downside seems cushioned

• Gold price fails to preserve modest intraday gains and retreats closer to the weekly low.
• More hawkish signals from Federal Reserve officials act as a headwind for the XAUUSD.
• An uptick in the US Treasury bond yields, a positive risk tone further weighs on the metal.
• Subdued US Dollar demand turns out to be the only factor offering support to Gold price.

Gold price struggles to capitalize on its modest intraday gains and retreats to the lower end of its daily range during the early North American session. Currently placed around the $1,760 level, the XAUUSD remains well within the striking distance of the weekly low and seems poised to end in the red for the first time in three weeks.

Hawkish Fed signals act as a headwind for Gold price

The recent comments by a slow of US central bank officials suggest that more interest rate hikes were on the way, which, in turn, is seen acting as a headwind for the non-yielding Gold. Most recently, St. Louis Federal Reserve President James Bullard said on Thursday that the policy is not yet in a range estimated to be sufficiently restrictive to reduce inflation. Bullard added that the benchmark rate may need to rise as high as 7% to put downward pressure on inflation.

An uptick in US Treasury bond yields further weigh on XAUUSD

Furthermore, the better-than-expected release of the Retail Sales figures from the United States cast doubts on the peak inflation narrative. This suggests that the Federal Reserve might still be far from pausing its rate-hiking cycle, which offers some support to the US Treasury bond yields. Apart from this, a goodish recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - is also weighing on the safe-haven Gold price.

Subdued US Dollar demand offers some support to Gold price

The US Dollar, meanwhile, struggles to gain any meaningful traction and oscillates in a narrow range, despite an uptick in the US bond yields. The subdued USD price action offers some support to the Dollar-denominated Gold price and should help limit the downside, at least for the time being. Hence, it will be prudent to wait for strong follow-through selling below the $1,754-$1,753 region, or the weekly low, before positioning for a deeper corrective pullback for the XAUUSD.

Gold price technical outlook

From a technical perspective, sustained weakness below the $1,754-$1,753 area will set the stage for an extension of this week's retracement from the highest level since mid-August. The subsequent selling has the potential to drag Gold price to the $1,734-$1,732 strong horizontal resistance breakpoint, now turned support. The latter should act as a pivotal point, which if broken decisively will negate any near-term positive outlook and shift the bias in favour of bearish traders.

On the flip side, the $1,767-$1,770 region now seems to act as an immediate strong barrier for Gold price. The next relevant resistance is pegged near the $1,785-$1,786 zone, or the multi-month peak. A sustained strength beyond should allow the XAUSD bulls to challenge a technically significant 200-day Simple Moving Average (SMA), currently around the $1,800 psychological mark.

Key levels to watch