Gold Price Forecast: XAU/USD falls but remains above $1800 amid higher US bond yields

• Gold slides for the second straight day as worse than expected US economic data crossed newswires.
• US retail sales dropped the most in 10-months.
• The US 10-year T-bond yield hits 1.771%, weighing on the non-yielding metal.

The yellow metal slips for the second-consecutive day amid dismal US economic data revealed on Friday. Gold spot (XAU/USD) is trading at $1,816 at the time of writing.

During the North American session, XAU/USD failed to capitalize on worse than expected US Retail Sales, Industrial Production, and UoM Consumer Sentiment. In the meantime, the US 10-year benchmark yield advances firmly five basis points, sitting at 1.771%, regaining some ground, after hitting 1.808% at the beginning of this week.

Dismal US macroeconomic data mainly ignored by investors, per the market reaction

On Friday, the US Department of Commerce revealed December’s Retail Sales report, which portrayed a contraction of 1.9%, worse than the -0.1% estimated by economists. Excluding gasoline and autos, slumped, even more, 2.5%, lower than November’s 0.1% drop. In the meantime, US Industrial Production shrank 0.1%, when analysts forecasted a 0.3% growth.

Adding fuel to worse than expected US economic data releases, the UoM Consumer Sentiment fell to 68.8, versus 70.0 estimated. 

Fed speakers crossing the wires

Earlier in the day, the New York Fed President John Williams crossed the wires. He said that “the economy is near maximum employment” and emphasized that the Fed needs to tackle inflation. Williams further noted that some “factors driving inflation are still related to pandemic effects.”

John Williams expects inflation would drop to 2.5% by the end of the year, and it would reach the US Fed’s 2% target in 2023.

In the meantime, San Francisco Fed’s President Mary Daily said that the main reason for inflation is Covid-19. She said that the central bank needs to adjust its policy and that “slowing the economy a little bit with rate hikes will help bring demand down into better line with supply.”

XAU/USD Price Forecast: Technical outlook

From a technical analysis perspective, gold’s daily chart is neutral-bullish biased. Whilst the daily moving averages (DMAs) reside below the spot price; the 200-DMA is trapped between the 50 on top and the 100-DMA on the bottom.

That said, the XAU/USD first resistance level would be September 3, 2021, cycle high at $1,834. A breach of the latter would expose the $1,900 psychological level, immediately followed by June’s 1, 2021, daily high at $1,916.