Gold Price Forecast: XAU/USD edges higher past $1,940 support confluence as United States Retail Sales loom

• Gold Price stays defensive after pushing back bears, justifies pre-data anxiety.
• Latest United States economics reassess concerns of Federal Reserve policy pivot, putting a floor under the US Dollar.
• Fears of slow economic transition in China, mixed concerns about inflation test XAU/USD bulls.
• US Retail Sales for June, risk catalysts eyed for the Gold Price directions amid pre-Fed blackout.

Gold Price (XAU/USD) stays defensive around $1,955, despite picking up bids during early Tuesday’s Asian session, as market players await the United States Retail Sales data to overcome the indecision at the trading floor. Apart from the pre-data anxiety, mixed concerns about China and the US Dollar’s failure to cheer the recently positive data, as well as the cautious optimism in the market, also prod the XAU/USD traders of late.

Gold Price edge higher amid mixed catalysts, cautious optimism

Gold Price began the week on a negative note and dropped to $1,945 before closing around $1,955 while marking a Doji candlestick on the daily formation. The same suggests the XAU/USD trader’s indecision amid mixed factors and cautious mood, even if the sentiment improves a bit of late.

While portraying the mood, Wall Street closed with minor gains and the US Treasury bond yields edged lower, which in turn weighed on the US Dollar Index (DXY) and helped the Gold Price to regain its charm.

That said, Monday’s unimpressive US data joined fears about China’s economic recovery and hopes of no major hawkish moves from top-tier central banks to underpin the XAU/USD run-up.

On Monday, New York (NY) Empire State Manufacturing Index for July eased to 1.1 from 6.6 prior and 0.0 market forecasts. The data failed to inspire the US Dollar Index (DXY) sellers initially before weighing on the DXY, probing Friday’s recovery backed by the upbeat prints of the University of Michigan’s (UoM) Consumer Sentiment Index and consumer inflation expectations for the said month.

On the other hand, China’s headline statistics confirmed the market’s fears that Australia’s biggest customer is facing economic headwinds, which in turn joined the US-China chatters to flag fears surrounding Beijing. That said, China’s second quarter (Q2) 2023 Gross Domestic Product (GDP) rose past the previous readings of 4.5% to 6.3% but eased below the analysts’ estimations of 7.3%. Further, the Industrial Production growth jumped to 4.4% YoY in June, compared to the 2.7% expected and 3.5% prior. However, the Retail Sales slumped to 3.1% from 12.7% prior and 3.2% market consensus. It should be noted that China’s June survey-based Jobless Rate for 24-year-olds jumped to a record high of 21.3%.

Elsewhere, US Treasury Secretary Janet Yellen said during a Bloomberg interview that the US is looking carefully at outbound investment controls on China while adding, “But they would be focused on a few sectors." The policymaker also clarified that these would not be broad controls that would have a fundamental impact on the investment climate in China. During the weekend, US Treasury Secretary Yellen spoke at a meeting of Group of 20 (G20) finance ministers and central bankers in India while saying, “I am eager to build on the groundwork that we laid in Beijing to mobilize further action.” Hence, the US-China tension is back in the spotlight but the pace of pessimism appears slow and mixed.

It’s worth observing that the policy hawks at the European Central Bank (ECB), Federal Reserve (Fed), Bank of England (BoE), Bank of Canada (BoC) and Swiss National Bank (SNB) are all likely to run out steam of late amid economic fears and hence underpin the Gold price upside.

Moving on, US Retail Sales for June, expected to rise to 0.5% versus 0.3% prior, will be crucial to watch for clear directions of the Gold Price. Also important will be the US Industrial Production for June, expected -0.1% versus -0.2% prior, as well as the US-China headlines and the bond market moves as Japan returns from a long weekend.

Gold Price Technical Analysis

Despite the latest corrective bounce, the Gold Price reverses the previous week’s upside break of a six-week-old falling resistance line, now immediate support near $1,939, as the Relative Strength Index (RSI) line, placed at 14, retreats from the overbought territory.

Adding credence to the downside bias are the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator.

However, a convergence of the 50-SMA, 200-SMA and the aforementioned resistance-turned-support line, around the $1,940-38 zone, appears a tough nut to crack for the Gold bears to retake control.

Following the downside break of $1,938, the XAU/USD sellers could aim for the multiple supports surrounding the $1,900 round figure, marked since late June, while the monthly low of $1,893 can challenge the Gold bears afterward.

On the contrary, the Gold Price recovery remains elusive below the monthly high marked in the last week at around $1,963. Also acting as an upside filter is a two-month-old horizontal resistance zone near $1,985.

Overall, the Gold Price is technically expected to edge lower within a small trading range between $1,985 and $1,938.

Gold Price: Four-hour chart

Trend: Further downside expected