Gold Price Forecast: XAU/USD pulls back from seven-month high at $1,850

• Gold price turns south after facing rejection at the $1,850 key level.
• The US Dollar rebound gathers steam in the European session. 
• Sell-off in the US Treasury yields cap the downside in the Gold price.

Gold price is seeing a quick retracement from fresh seven-month highs of $1,850 reached in the early European morning. The ongoing retreat in the bright metal is owing to an impressive wave of US Dollar buying seen across the financial markets, as the first full trading day of 2023 kicks in.

The resurgent US Dollar demand is being witnessed despite a fresh risk rally in the European stock markets, with the pan-European Euro Stoxx 50 climbing 1.50% so far. The market mood remains underpinned by the expectations of a reopening in China from Covid-related restrictions while the country’s manufacturing sector showed a slight improvement in December.

Meanwhile, the pullback in the Gold price appears limited, as the weakness surrounding the US Treasury bond yields gathers steam and bodes well for the non-yielding precious metal.

Gold traders now await US S&P Global Manufacturing PMI for December and the Wall Street open for further trading cues. 

Gold price: Technical levels to watch