Gold Price Forecast: XAU/USD retreats towards $1,775 amid hawkish central banks, recession woes

• Gold price holds onto Monday’s bearish bias as it renews intraday low, stays mildly offered though.
• Recession fears weigh on Gold price as global central banks promote higher rates.
• United States Treasury bond yields print three-day uptrend and underpin US Dollar’s latest rebound.
• Mixed concerns surrounding China, Federal Reserve test Gold buyers ahead of key data/events.

Gold price (XAU/USD) takes offers to refresh intraday low near $1,785 during early Tuesday, extending the week-start losses amid firmer US Dollar. In doing so, the Yellow metal bears the burden of the global central bank actions amid a light calendar and mixed economic signals from key customers like the United States and China.

Central Banks weigh on Gold price

Be it the European Central Bank (ECB) or the Federal Reserve (Fed), not to forget the Bank of England (BOE) and the Swiss National Bank (SNB), all of them played hawkish moves the last week and challenged Gold buyers. Following that, policymakers from some of the central banks crossed wires to renew the chatters surrounding higher rates and weighed on the XAU/USD prices. Notable among them were ECB Vice-President Luis de Guindos and New York Fed President John Williams.

Recently, the Reserve Bank of Australia's (RBA) latest Monetary Policy Meeting Minutes conveyed hawkish bias among policymakers. However, the People’s Bank of China (PBOC) kept the one-year and five-year Loan Prime Rates (LPR) unchanged at 3.65% and 4.30% in that order.

It should be noted that the higher rates and strong inflation lead traders towards less risky assets like the US Dollar while cutting off from the Gold price.

United States Treasury bond yields defend US Dollar bulls, weigh on Gold price

Given the market’s rush towards risk safety and higher interest rates from the Federal Reserve (Fed), the United States Treasury bond yields remain firmer for the third consecutive day and underpin the US Dollar’s demand. It should be noted that the benchmark 10-year US bond yields rose 1.5 basis points (bps) to 3.60% whereas the two-year counterpart rises to 4.26% by the press time, which in turn portrays the yield curve inversion and suggests the market’s rush for risk safety. As a result, the Gold price remains pressured recently.

China-linked optimism fails to impress XAU/USD traders

Chinese policymakers showed readiness for more stimulus at the annual Central Economic Work Conference. "We must insist on stability first next year while we strive for progress,” stated the leaders. However, a fall in China’s business sentiment, according to a survey conducted by the World Economics Survey, to the lowest levels in a decade joins doubts over the nation’s Covid conditions and economic recovery to challenge the Gold buyers.

Risk catalysts in focus

Given the lack of major data/events, Gold traders should pay attention to the risk catalysts like the Covid headlines from China and political news surrounding Russia, not to forget the Euro area oil price cap updates, for fresh impulse. That said, the commodity price may witness lackluster moves as traders seem to cheer holiday mood before the time.

Gold price technical analysis

Gold price fades bounce off the 21-DMA, as well as the 61.8% Fibonacci retracement level of the Gold’s June-September moves, near $1,778-75 by the press time.

It’s worth noting that the bearish divergence between the Gold price and the Relative Strength Index (RSI), located at 14, keeps XAU/USD sellers hopeful. That said, the RSI divergence is known as the difference between the price and the RSI. In this case, the higher low on prices joins the lower low on the RSI to tease the Gold bears.

In a case where the Gold price remains weak past $1,775, a downward trajectory toward October’s peak near $1,730 can’t be ruled out.

Alternatively, the $1,800 could challenge short-term XAU/USD bulls ahead of the six-month-old ascending resistance line, close to $1,815 by the press time.

Overall, the Gold price remains on the bear’s radar but a clear break of $1,775 becomes necessary.

Gold price: Daily chart

Trend: Further downside expected