Gold Price Forecast: XAU/USD recovers $1970 as US business activity improved

• Gold price recovers after hitting a weekly low of $1953 following positive US economic data release.
• US Treasury bond yields surge, with the 10-year reaching 4.88%, while US real yields drop to 2.43%.
• Geopolitical risks, upcoming US GDP figures, and inflation data are expected to influence XAU/USD prices.

Gold price (XAU/USD) pares some of its earlier losses and climbs back above the $1970 mark after hitting a new weekly low at around $1953 after the release of US economic data. The XAU/USD is trading at around $1974.30 above its opening price by a minuscule 0.09%.

XAU/USD climbs back above $1970, trading at $1974.30, up by 0.09%

US economic data sent US bond yields surging, a headwind for XAU/USD, initially heading toward the day’s low, as business activity in October improved. S&P Global revealed that Manufacturing PMI expanded to 50, surpassing expectations, while the Services PMI reached 50.9, also above forecasts. This resulted in a Composite PMI of 51, indicating overall growth in business activity.

The market reacted, sending US Treasury bond yields rising, with the 10-year reaching a high of 4.88% before retreating five basis points to 4.84%. In the meantime, US real yields, which inversely correlate to Gold prices, dropped 0.33% and sit at 2.43% after reaching a year-to-date (YTD) of 2.61%.

Meanwhile, geopolitical risks would likely continue to underpin XAU/USD prices as the conflict gathers momentum, with Israel intensifying its attacks on Gaza’s strip.

Aside from this, traders' focus shifts toward the release of additional economic data from the United States, with third-quarter Gross Domestic Product (GDP) figures pending to be released on Thursday, along with unemployment claim numbers. On Friday, the Federal Reserve’s (Fed) preferred gauge for inflation is expected to show inflation continues to slow down amid speculation of the end of the Fed’s tightening cycle.

XAU/USD Price Analysis: Technical outlook

Technically speaking, the XAU/USD remains upward biased after testing support earlier in the day, with prices bouncing at a September 1 high of $1953. Following that, Gold jumped toward the current spot price and could soon challenge the $2000 mark. Once that level is cleared, the year-to-date (YTD) high of $2081.82 will be up next. Conversely, if Gold slides below the October 23 low of $1963.29, expect a drop to $1950.l followed by the 200-day moving average (DMA) at $1931.61.