Gold Price Forecast: XAU/USD bears take a breather on their way to $1,860, focus on yields

• Gold Price stabilizes at five-month low, braces for fourth consecutive weekly fall despite latest corrective bounce.
• Treasury bond yields march toward worrisome levels, China woes also weigh on XAU/USD.
• US Dollar’s bullish consolidation allows Gold bears to take a breather before refreshing multi-day low.
• Technical details suggest further downside of XAU/USD price, focus on 6.5-month-old horizontal support.

Gold Price (XAU/USD) prints mild gains around $1,891 as it consolidates the consecutive fourth weekly loss at the lowest level in five months amid early Friday in Asia. In doing so, the XAU/USD justifies the US Dollar’s latest retreat but stays on the bear’s radar amid a broad risk aversion wave and the firmer United States Treasury bond yields., especially amid China woes.

Gold Price preserves bearish bias as yields flag economic woes

Gold Price portrays a corrective bounce from the multi-day low as the US Dollar Index (DXY) retreats from the highest level in two months to 103.40 at the latest. The Greenback’s latest retreat fails to supersede the recent doubts about the US Federal Reserve’s (Fed) policy pivot concerns which previously drowned the US Dollar and favored the Gold buyers.

That said, the recently firmer United States statistics and the hawkish Fed Minutes could be linked to a shift in the market’s dovish bias about the US central bank. On Thursday, US Philadelphia Fed Manufacturing Survey marked the strongest print since April 2022, as well as the first positive outcome in a year, while rising to 12.0 for August from -13.5 prior and -10.0 expected. On the same line, the US Initial Jobless Claims also edged lower to 239K for the week ended on August 11 versus a revised up 250K prior and the market expectations of 240K. It should be noted that the four-week average of the Initial Jobless Claims and the weekly figures of the Continuing Claims for the period ended on August 04 edged higher. Earlier in the week, the US Industrial Production and Retail Sales for July marked surprising growth but the housing numbers were mixed.

Additionally, the latest Fed Minutes showed that most policymakers preferred supporting the battle again the ‘sticky’ inflation, despite being divided on the imminent rate hike, which in turn challenges the market’s previous policy pivot concerns about the US central bank and favors the Greenback.

Even so, the CME’s FedWatch Tool signals a nearly 86% chance of the Fed’s no rate hike in September and prods the US Dollar bulls, which in turn allows the Gold bears to take a breather.

Elsewhere, downbeat concerns about the world’s biggest Gold customer China also exert downside pressure on the XAU/USD. Recently, China’s second-large realtor, as well as the world's most heavily indebted property developer, Evergrande filed for protection from creditors in a US bankruptcy court on Thursday, per Reuters. The same escalate fears surrounding the world’s second-largest economy, as well as the global economic transition, as it battles with the slowing economic recovery and fuels concerns about the financial health of China’s biggest realtor, namely Country Garden. Amid these fears, top-tier US banks like JP Morgan and Barclays have recently cut China growth forecasts and challenged the XAU/USD buyers indirectly.

Against this backdrop, Wall Street again closed in the red and the US 10-year Treasury bond yields march toward the levels marked in 2007. It should be noted that such high levels of yields previously triggered fears of global recession and drowned the riskier assets like equities and commodities previously. That said, the US 10-year Treasury bond yields retreated in the last hour to 4.28% and triggered the Gold price rebound. However, the S&P500 Futures print mild losses and checks the XAU/USD recovery.

Looking ahead, a light calendar may push the Gold traders to watch for more risk catalysts for clear directions.

Gold Price Technical Analysis

Gold Price stabilizes near the seven-month-old horizontal support area surrounding $1,890. In doing so, the XAU/USD justifies the downside break of the 200-DMA, as well as the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator.

However, the nearly oversold conditions of the Relative Strength Index (RSI) line, placed at 14, underpins the XAU/USD’s bottom-picking, which in turn suggests a corrective bounce in prices before directing the bears toward the 6.5-month-old horizontal support zone surrounding $1,860.

That said, the Gold Price recovery appears elusive below the 200-DMA hurdle of around $1,907.

Following that, the 50-DMA and a downward-sloping trend line from early May, respectively near $1,937 and $1,957, will test the XAU/USD bulls before directing them to July’s peak of around $1,987 acts as the last defense of the Gold sellers.

Overall, the Gold Price remains bearish despite the latest consolidation around the key support.

Gold Price: Daily chart

Trend: Further downside expected