Gold Price Forecast: XAU/USD remains on the defensive above $2,000

• Gold price attracts some sellers on the higher US dollar and bond yields.
• US Retail Sales came in well above expectations in December.
• Traders decreased their bets on interest rate cuts from the Federal Reserve (Fed) in March.
• The discouraging Chinese economic data exerts some selling pressure on the yellow metal.

Gold price (XAU/USD) drops to the $2,000 mark during the early Asian trading hours on Thursday. The downward momentum of yellow metal is supported by the strong economic data in the US, which dampened expectations of an imminent cut in interest rates. At press time, the gold price is trading at $2,007, up 0.07% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the USD’s value relative to the majority of its most significant trading partners, soars to the new 2024 peak near 103.70. The US Treasury yields edge higher across the curve, with the 10-year yield standing at 4.10%.

Investors are uncertain about the timeframe that the Federal Reserve (Fed) could start discussing the interest rate cuts. According to the CME Fedwatch tool, traders see 57% odds for a 25 basis points (bps) interest rate cut in March, down from 70% at the start of the week.

Furthermore, the better-than-expected US Retail Sales data pushed back expectations of rate cuts. On Wednesday, December Retail Sales came in at 0.6% MoM versus 0.3% prior. For the control group, the Retail Sales figure arrived at 0.8% in December from the previous reading of 0.5%.

The sentiment around further deterioration in Chinese data releases weighs on the gold price as China is one of the world's largest gold consumers. The nation’s Gross Domestic Product (GDP) expanded at 5.2% last year, missing expectations of 5.3%. Industrial production rose 6.8% YoY in December, and Retail Sales eased to 7.4% YoY in December from 10.1% in the previous month.

Traders will keep an eye on the US Housing Starts, Building Permits, weekly Initial Claims, and Philly Fed Manufacturing Index, due on Thursday. These figures could give a clear direction to the gold price.