Gold Price Forecast: XAU/USD retreats from $1,855 on USD rebound ahead of US inflation

• Gold consolidates recent gains as yields underpin DXY recovery.
• Recession fears join geopolitical news, market’s inaction to weigh on prices.
• Risk catalysts are important to watch for fresh impulse amid a light calendar.
• Gold Price Forecast: Tepid recovery within a risk-averse environment

Gold Price (XAU/USD) fades the previous day’s recovery around $1,855, mildly offers around $1,850 by the press time, as the US dollar buyers return to the table during Wednesday’s Asian session.

The greenback’s rebound could be linked to the market’s downbeat sentiment, as well as a recovery in the US Treasury yields. That said, the US 10-year Treasury bond yields rise 1.5 basis points (bps) to 2.98% after snapping a six-day downtrend the previous day.  It’s worth noting that the S&P 500 Futures’ first negative daily performance in three, down 0.25% around 4,150 at the latest, also seems to underpin the greenback’s safe-haven demand and weigh on gold prices.

The market’s consolidation of recent moves, amid a lack of major data/events, as well as risk-negative news from Ukraine, could be cited as the underlying reasons for the metal’s latest weakness. “Kyiv says it has not yet reached any agreement with Russia or Turkey to allow the safe passage of its grain ships in the Black Sea, injecting skepticism into a push by the U.N. to create a vital food corridor,” said Politico.

Recession fears emanating from the faster monetary policy normalization by the major central banks were cited as the key reason for the previous day’s moves. The fears grew on a comment from World Bank (WB) President David Malpass who warned that faster-than-expected tightening could push some countries into a debt crisis similar to the one seen in the 1980s.

Also exerting downside pressure on the bond coupons were comments from US Treasury Secretary Janet Yellen and hopes of faster economic recovery in China, both of which favor risk appetite. On Tuesday, US Treasury Secretary Yellen testified on the Fiscal Year 2023 Budget before the Senate Finance Committee while saying that the US economy faces challenges from "unacceptable levels of inflation", as well as headwinds from supply chain snags. The policymaker added, “An appropriate budget is needed to complement Fed’s actions to tame inflation without harming the labor market.”

To sum up, gold prices pare recent gains but the sellers remain cautious amid a lack of major data/events, which in turn requires the bullion traders’ discretion ahead of Thursday’s European Central Bank (ECB) meeting and Friday’s US Consumer Price Index (CPI) for May.

Technical analysis

Gold pulls back from 100-HMA, backed by RSI retreat, as sellers struggle to retake control. However, the 50-HMA and an immediate support line, respectively near $1,848 and $1,847, challenge the metal’s nearby downside.

Following that, the weekly bottom surrounding $1,836 and the monthly low of $1,828 may entertain XAU/USD bears ahead of directing them to the $1,800 threshold.

Alternatively, recovery moves need to break the 100-HMA hurdle surrounding $1,855, as well as 38.2% Fibonacci retracement of June 01-03 upside near $1,857, to recall the gold buyers.

Should the bullion prices remain firmer past the $1,857 resistance, the upside momentum may aim for the current month high of $1,874.

Gold: Hourly chart

Trend: Further weakness expected