Gold Price Forecast: XAU/USD drops further to test 50 DMA amid notable USD demand

• Gold Price erases Friday’s rebound to test the crtiical 50 DMA at $1,782.
• China-led risk-aversion inspires the US dollar rally while yields recover.
• Focus shifts to US Retail Sales and Fed minutes for the next big move in XAU/USD.

Gold Price is tumbling towards the $1,780 level in European trading, having struggled around $1,800 earlier in the Asian session.

The risk-off market profile remains at full steam after Chinese activity came in below forecasts and fuelled growth concerns. Further, unexpected rate cuts by the PBOC amplified concerns over an economic slowdown in the world’s second-largest economy. Investors seek refuge in the US dollar amid the market panic, as US-Sino tensions also remain rife. A US congressional delegation arrived in Taiwan on Sunday, less than two weeks after the contentious visit by House Speaker Nancy Pelosi,

Also read: Gold Price Forecast: XAU/USD closes the week above 50 DMA, what’s next?

The greenback also finds fresh support from the renewed uptick in the US Treasury yields, as investors reassess Fed tightening expectations after Friday’s strong Michigan Consumer Sentiment Index. The preliminary August estimate of the UoM consumer sentiment index rose to three-month highs of 3.6 points to 55.1 from a July reading of 51.5. The inflation expectations sub-index eased, which triggered a sharp risk rally on Wall Street.

In absence of the first-tier US economic release, the Fed rate hike expectations and risk trends will have a significant impact on the bright metal. The main event risk for this week is Wednesday’s FOMC minutes, which will set a fresh direction for the bullion if it hints at the Fed’s future policy path.

Gold Price: Daily chart

Daily closing below the 50-Daily Moving Average (DMA) resistance-turned-support at $1,782 is critical to offsetting the recent recovery momentum. Bears will then look out for the $1,770 round figure, below which the 21 DMA at $1,756 will be tested.

On the upside, another strong attempt above the $1,800 mark will probe the monthly high of $1,808, above which fresh buying opportunities will emerge.

Gold Price: Additional levels to consider