Gold Price Forecast: XAU/USD teases bullish pennant near $1,860, US data eyed

• Gold snaps six-day uptrend but stays on the way to post the biggest weekly gains since May.
• Market sentiment dwindles, DXY tracks US Treasury yields to grind higher around multi-day top.
• US Michigan Consumer Sentiment figures, China headlines will be in focus.

Gold (XAU/USD) bulls take a breather during the longest weekly run-up in six months, down 0.32% intraday around $1,856 heading into Friday’s European session.

The yellow metal drops for the first time in the last seven days as the US Dollar Index (DXY) tracks firmer Treasury yields, mostly steady, to refresh the 16-month high. Also favoring the greenback, and negatively affecting the gold prices, is the market’s rush to risk-safety amid mixed concerns over China’s economic transition and Evergrande news, not to forger the Sino-American tussles.

That said, the US Dollar Index (DXY) seesaws around 95.25, the highest level since July 2020 while the US 10-year Treasury yields struggle to remain firmer around 1.56%. That said, the stock futures print mild gains and the Asia-Pacific stocks trade mixed as China’s Communist Party members signed an accord, per Bloomberg, to choose President Xi Jinping as a leader for eternity. The same could join chatters surrounding the Sino-American ties ahead of the next week’s virtual summit between US President Joe Biden and his Chinese counterpart Xi Jinping to weigh on the sentiment and gold.

On a different page, the gold buyers remain hopeful as the Fed's tapering concerns remain elevated even as the US banking holiday faded the speculations of late. Additionally, talks over strong demand from Asia-Pacific countries, comprising the largest customers, add to the gold’s bullish catalysts.

It’s worth noting that the gold traders await the US Michigan Consumer Sentiment for November, expected 72.4 versus 71.7 prior, to reconfirm the Fed rate hike concerns.

Read: US Michigan Consumer Sentiment Index Preview: Inflation’s dangerous impact

Technical analysis

Gold consolidates weekly gains inside a three-day-old bullish pennant formation amid steady RSI. Also challenging the metal sellers, despite the latest pullback, is the weekly support line that puts a carpet under the short-term declines near the $1,848 level.

Even if the gold bears manage to conquer the $1,848 support level, convergence of the 200-HMA, 50% Fibonacci retracement (Fibo.) of the weekly upside and multiple lows marked during November 07-08, around $1,812-14, will be a tough nut to crack for them.

Alternatively, an upside clearance of the $1,865 hurdle will confirm the bullish chart pattern and trigger the run-up towards refreshing the multi-day top, beyond the latest one of $1,868.61.

In doing so, January’s high near $1,875 will be in focus ahead of the $1,900 threshold.

Gold: Hourly chart

Trend: Further upside expected