Gold Price Forecast: XAU/USD bulls eye $1,842 on firmer sentiment ahead of US data, Fed’s Powell

• Gold prices grind higher after bouncing off three-month low the previous day.
• Headlines from China, softer US data help improve market sentiment.
• US Retail Sales, Fed’s Powell eyed amid calls of 75 bps rate hike.
• Gold Price Forecast: Bulls defending the $1,800 threshold

Gold (XAU/USD) prices dribble around intraday high, keeping the rebound from a three-month low flashed the previous day, as firmer sentiment joins technical support to favor buyers. That said, the commodity prices seesaw around $1,825, intraday high near $1,829, by the press time of the mid-Asian session on Tuesday.

The recovery in the market sentiment could be linked to headlines from China, as well as recently downbeat US data and Fedspeak.

Shanghai conveyed plans to end the covid-linked lockdown after the third consecutive day of zero coronavirus cases outside the quarantine area. It’s worth noting that the latest comments from China State Planner, stating the increasing downside pressure on the economy, per Reuters, challenge the market’s optimism.

On the other hand, the NY Empire State Manufacturing Index for May, expected +15.5 versus -11.6 actual, as well as comments from New York Fed President John Williams. Fed’s Williams backed Chairman Jerome Powell’s 50 basis points (bps) rate hike idea by highlighting inflation as the main issue.

Amid these plays, the US 10-year Treasury yields added two bps to 2.9% whereas the S&P 500 Futures rose 0.40% at the latest. It’s worth noting that the US Dollar Index (DXY) remains pressured around 104.15, after printing a two-day pullback from a 20-year high.

That said, the gold traders will keep their eyes on the US Retail Sales for April, expected at 0.7% versus 0.5% prior, for initial directions. However, major attention will be given to Fed Chair Powell’s speech at the Wall Street Journal’s (WSJ) event.

Read: US Retail Sales April Preview: Market risk centers on recession

Technical analysis

Gold prices defend the early-day break of a one-week-old descending trend channel. The bullish chart confirmation joins a firmer RSI line to push further towards an upper line of the downward sloping channel from April 18, close to $1,842 by the press time.

It’s worth noting, however, that an XAU/USD upside past $1,842 needs validation from the 100-SMA level surrounding $1,868 to keep the buyers hopeful.

Meanwhile, pullback moves may initially aim for the $1,800 threshold but lower lines of the aforementioned bearish channel, respectively around $1,785 and $1,780, could limit short-term declines of the metal.

Overall, gold prices keep the bearish consolidation but a short-term corrective pullback can’t be ruled out.

Gold: Four-hour chart

Trend: Further recovery expected