Gold Price Forecast: XAU/USD rises back above $1780 on recession fears, weak China data

• Sentiment shifted negatively on weaker Exports from China as recession fears increased.
• Economic data revealed in the United States warrants further Federal Reserve tightening.
• Gold Price Forecast: Reclaiming $1780, put in play a test to $1800.

Gold price climbs back above $1770 amidst a risk-off impulse due to negative data from China increasing concerns of a global recession, while worldwide central banks continue to raise borrowing costs. The last rounds of economic data released in the United States (US), depicting a resilient economy, add pressure on the Federal Reserve (Fed) to act. Nevertheless, the US Dollar (USD) edges lower, a tailwind for the yellow metal. At the time o typing, the XAU/USD is trading at $1783., after hitting a low of $1768.

China’s exports tumbled, spurring recession woes

US equities fall, depicting a risk-off mood. Data released in the Asian session that China’s exports plunged 8.7% YoY in November, well beneath the 3.5% contraction expected, triggered pessimism that the economy would further slow down, despite Chinese authorities relaxing Covid-19 restrictions.

Economy in the United States remains resilient, pressures the Federal Reserve

Recent data from the United States had shown that the Federal Reserve would need to continue to tighten monetary policy. The US economy adding 263K new jobs, as demonstrated by November’s Nonfarm Payrolls (NFP) report, showed the tightness of the labor market. Additionally, Average Hourly Earnings jumped by 5.1% YoY vs. 4.9%, adding to inflationary pressures.

In the meantime, the ISM Non-Manufacturing PMI grew by 56.6, exceeding forecasts of 53.3, bolstered by the holiday season. According to Bloomberg analysts, “the price subindex confirmed the inflationary impulse in services is still strong despite more widespread disinflation in goods sectors.”

Federal Reserve to diggest PPI, Consumer Sentiment, and next week’s CPI

Given the backdrop mentioned above, the next week’s Federal Reserve Open Market Committee (FOMC) meeting would be crucial, albeit the Federal Reserve Chair Jerome Powell gave the green light on 50 bps rate hikes. However, with US data looming, like the Producer Price Index, the University of Michigan (UoM), and the following week’s Consumer Price Index (CPI), it would shed some cues about inflation elevating or easing.

Gold Price Forecast: XAU/USD Technical Outlook

From a technical perspective, Gold remains upward biased. However, after breaching the $1800 figure last Friday, the yellow metal failed to capitalize on broad US Dollar weakness, as XAU/USD tumbled below the $1800 mark. Gold buyers’ lack of strength is well portrayed by the Relative Strength Index (RSI), registering a series of lower peaks, while price action is aimed upwards. Also, the Rate of Change (RoC) confirms buying momentum is fading.

Nevertheless, Gold’ was capped around $1766, and XAU/USD is back above $1780, eyeing a break of the November 15 swing high at $1786.53. If XAU/USD breaches the latter, the next resistance will be the $1800 figure. The break above will expose the June 17 daily high at $1857.20, followed by the June 13 pivot high at $1879.45.