Gold Price Forecast: US Dollar rebound triggers XAU/USD pullback amid Covid, Ukraine woes

• Gold price grinds higher inside three-week-old bearish triangle.
• Pullback in US Treasury bond yields, mixed US data favor XAU/USD bulls.
• Chinese travellers to face multiple tests amid Covid spread, CDC Official sounds optimistic.
• Explosions were heard in Ukraine’s capital Kyiv, tensions escalate in Kherson.

Gold price (XAU/USD) takes a U-turn from the intraday high as traders in the west ascertain fears emanating from China’s Covid conditions and Ukraine during early Thursday. In doing so, the precious metal drops to $1,806 while consolidating the intraday gains.

That said, around seven major nations have recently announced Covid test requirements for Chinese travelers as the virus cases swirl in the dragon nation but Beijing reverses the “Zero-Covid” policy. It’s worth noting that a top official from the Chinese Center for Disease Control and Prevention (CDC) recently warned of Covid spreading throughout the holiday season. The diplomat, however, also mentioned that the Coronavirus outbreaks have peaked in Beijing, Tianjin and Chengdu.

Elsewhere, Russia’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories, as well as an escalated war in the city of Kherson, weighs on the market sentiment. Recently, explosions were heard in Kyiv and Kharkiv after a Ukrainian diplomat warned of a missile launch.

Even so, downbeat prints of the US 10-year Treasury yields, down 3.0 basis points (bps) to 3.85%, probes the US Dollar Index (DXY) bulls and puts a floor under the Gold price.

It’s worth mentioning that the options market appears optimistic over the yellow metal as the latest risk reversal (RR) for the XAU/USD, a difference between the calls and puts, appears positive to the prices. That said, the one-month RR eyes the biggest weekly print in four on a week-on-week basis while also reversing the previous monthly fall with +0.430 print at the latest.

Moving on, weekly prints of the US Initial Jobless Claims and Chicago PMI for December will be eyed for short-term directions but major attention will be given to the risk catalysts and the bond market moves during the year-end inaction.

Gold price technical analysis

A three-week-old ascending triangle restricts Gold price between $1,782 and $1,825. That said, the XAU/USD currently fades bounce off a fortnight-old upward-sloping support line inside the stated triangle, around $1,800 by the press time.

It’s worth noting that the bearish MACD signals and sluggish prints of the RSI (14) add strength to the downside bias. However, the 200-SMA level of $1,780 acts as an extra barrier for the Gold sellers before giving them control.

Alternatively, an upside clearance of $1,825 won’t hesitate to challenge June’s peak surrounding $1,880.

Gold price: Four-hour chart

Trend: Pullback expected