Gold Price Forecast: XAU/USD retreats towards $1,920 key support amid sluggish sentiment, PMIs in focus

• Gold price retreats from intraday high as bulls seek fresh clues to keep the reins.
• Challenges to US-China ties, mixed PMIs from Asia-Pacific majors probe XAU/USD bulls.
• China holidays, Fed blackout restrict momentum as Gold traders await US preliminary PMIs.

Gold price (XAU/USD) slides from the intraday high to $1,932 during early Tuesday morning in Europe. In doing so, the bullion price reacts to the latest challenges to sentiment amid an inactive market performance due to the lack of major data/events, as well as the absence of China traders and the Fed talks.

That said, the headlines suggesting the US confrontation with China over companies’ ties to the Russian war effort seemed to have probed the risk appetite at the latest. On the same line could be the talks surrounding the US debt ceiling in the Senate.

On the same line, an increase in the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data, rise for the third consecutive day to 2.28% each and justify the pre-blackout hawkish Fed comments and challenge the sentiment.

Alternatively, softer prints of the US Conference Board’s Leading Index for December joined the lines of previous downbeat data from the US and signaled to ease inflation fears in the world’s largest economy, which in turn suggests less need for the Fed to be hawkish in February. It’s worth noting that the market players do expect a softer Fed rate hike in February and policy pivot afterward, which in turn weigh on the US Dollar.

It’s worth mentioning that the first readings of January’s activity data from Japan, Australia and New Zealand came in mixed, mostly positive, which in turn pushed back the looming recession fears but failed to inspire Gold buyers.

Amid these plays, the S&P 500 Futures resist following Wall Street’s gains while retreating from the six-week high marked the previous day, making rounds to 4,030-35 at the latest. On the same line, the US 10-year and two-year Treasury bond yields snap three-day recovery moves by struggling around 3.51% and 4.21% by the press time.

Looking forward, the Gold price may witness a pullback amid a cautious mood ahead of the first readings of January’s S&P Global PMIs and the fourth-quarter (Q4) Gross Domestic Product (GDP).

Gold price technical analysis

Gold price eases from the weekly bullish triangle’s top line as the yellow metal pares intraday gains around $1,940. The pullback moves also gain support from the RSI (14) retreat and the easing bullish bias of the MACD.

As a result, the XAU/USD price is likely to decline towards the $1,920 support confluence including the 100-Hour Moving Average (HMA), the stated triangle’s support line and the previous resistance line from January.

It’s worth noting, however, that the Gold price weakness past $1,920 won’t hesitate to break the $1,900 threshold while highlighting the monthly low surrounding $1,825 as the next stop for the XAU/USD bears.

Alternatively, an upside clearance of the $1,940 hurdle could quickly propel the Gold price towards the 61.8% Fibonacci Expansion (FE) of the metal’s moves between January 12 and 23, near $1,952.

Following that, March 2022 peak surrounding $1,966 will be the focus of the XAU/USD bulls.

Overall, Gold price is likely to pare intraday gains but the bullish trend remains intact, at least in the short term, unless breaking the $1,920 level.

Gold price: Hourly chart

Trend: Pullback expected