Gold Price Forecast: XAU/USD stays depressed below $1,750 on fresh DXY run-up ahead of key PMIs

• Gold price retreats from daily top as DXY resumes uptrend after early-day pullback.
• Fears of recession, China-linked optimism and hawkish Fed bets keep XAU/USD buyers hopeful.
• US data, risk catalysts could offer intermediate halt ahead of Friday’s Jackson Hole Symposium.

Gold price (XAU/USD) dropped back towards $1,700, retreating from the intraday high near $1,740 heading into Tuesday’s European session, as the market’s risk-aversion returns to the table. That said, the yellow metal printed mild gains earlier in the day as the US Treasury yields retreated from the monthly peak.

It’s worth observing that the US Treasury yields refreshed monthly high before the early-day retreat, down two basis points (bps) near 3.0% by the press time.

The US Dollar Index (DXY), on the other hand, remains firmer during the five-day uptrend while ignoring the softer yields.

The reason could be linked to China’s pessimism despite the readiness for more stimulus, as signaled by China Securities News. Also challenging the yellow metal buyers are the fears that Russia could add strength to its invasion of Ukraine, per the anonymous US source of Reuters.

Additionally, fears of economic slowdown and the increasing bets on the 0.75% rate hike by the US Federal Reserve (Fed) in September, favor the XAU/USD bears.

Looking forward, the market’s fears could keep exerting downside pressure on the gold price. However, the preliminary S&P Global PMIs from the UK, Eurozone and the US, for August month, will be important for fresh impulse. Also in-line for publishing are the US New Home Sales for July and Richmond Fed Manufacturing Index for August. Above all, Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, up for publishing on Friday, will be crucial for the market as a whole.

Technical analysis

Gold fades bounce off the 61.8% Fibonacci retracement of July-August upside, around $1,730. In doing so, the XAU/USD remains inside a one-week-old bearish channel, between $1,721 and $1,745.

It’s worth noting, however, that the impending bull cross of the MACD and the RSI’s rebound from the oversold territory underpin the optimism of the XAU/USD buyers.

However, corrective pullback needs validation from the 200-SMA level surrounding $1,750 to tease buyers.

Meanwhile, a downside break of $1,721 could direct gold bears towards the late July swing low near $1,711 before highlighting the $1,700 threshold.

Gold: Four-hour chart

Trend: Further weakness expected