Gold Price Forecast: XAU/USD teases bears ahead of Federal Reserve’s favorite United States inflation gauge

• Gold price slips from bull’s radar after a three-day uptrend, sidelined of late.
• XAU/USD retreats as US Dollar bounced off an eight-month low after the United States Gross Domestic Product.
• Upbeat performance of US Treasury bond yields also weighed on Gold prices.
• Federal Reserve’s preferred inflation precursor eyed for clear directions on Gold price.

Gold price (XAU/USD) pushes back the bulls at the nine-month high, after rising for the last three consecutive days, even as it seesaws around $1,930 during the early hours of Friday’s Asian session. That said, the metal’s latest pullback could be linked to the rebound in the United States Treasury bond yields and the US Dollar after the key data, including the fourth quarter (Q4) Gross Domestic Product (GDP). However, the cautious mood ahead of the Federal Reserve’s preferred inflation gauge, namely the Core Personal Consumption Expenditures - Price Index for December, seems to probe the Gold sellers of late, especially ahead of the next week’s Federal Open Market Committee (FOMC) meeting.

United States data weighs on Gold

A slew of the United States key data was released on Thursday and allowed the market to alter its previous bias towards the Federal Reserve, which in turn triggered a corrective bounce of the US Dollar and weighed on the Gold price after three consecutive days of run-up.

On Thursday, the US Bureau of Economic Analysis' (BEA) first estimate of the US fourth quarter (Q4) Gross Domestic Product marked an annualized growth rate of 2.9% versus 2.6% expected and 3.2% prior.

On the same line, the Durable Goods Orders jumped 5.6% in December versus 2.5% market forecast and -1.7% upwardly revised prior.

It should be noted, however, that the growth of Personal Consumption Expenditures Prices weakened to 3.2% QoQ in Q4 compared to 4.3% marked forecast and prior readings. Further, Core Personal Consumption Expenditures eased to 3.9% QoQ for the Q4 from 4.7% previous readings, versus 5.3% expected.

Following the mostly upbeat data, talks are loud that the Federal Reserve will have a chance to defend its hawkish moves, especially the interest rate hikes, which in turn propelled the US Dollar and weighed on the XAU/USD.

That said, the US Dollar Index (DXY) marked the first daily positive in three while bouncing off the lowest levels since May 31, 2022, pokes earlier on Thursday.

US Treasury yields probe XAU/USD bulls despite upbeat equities

Not only does the US Dollar manages to cheer the aforementioned key data from the world’s largest economy but the US Treasury bond yields also recovered and exerted downside pressure on the XAU/USD price. That said, the hawkish hopes from the European Central Bank (ECB), as well as the Federal Reserve (Fed), in contrast with the fresh fears of global economic slowdown, as per the fresh survey of Reuters, seem to be the underlying reason for the latest selling of Gold and bonds.

Federal Reserve’s preferred inflation gauge eyed

Having witnessed upbeat data from the United States, Gold traders will pay attention to the monthly readings of the Core Personal Consumption Expenditures - Price Index for December, expected to remain unchanged at 0.2% MoM, for aptly forecasting the next week’s Federal Reserve moves. Should the inflation precursor eases before the next week’s Fed meeting, the Gold bears will have more reasons to extend the latest pullback.

Gold price: Technical analysis

Gold price retreats from a fortnight-old ascending resistance line while stabilizing after the first negative daily closing in four. Even so, the XAU/USD bounces off the 50-bar Simple Moving Average (SMA), around $1,924 by the press time.

The corrective bounce, however, appears ephemeral as the Relative Strength Index (RSI) line, placed at 14, as well as the Moving Average Convergence and Divergence (MACD) indicator, flash mixed signals.

As a result, the Gold price remains on the bear’s radar and can break the immediate support near $1,924, which in turn highlights the one-month-old support line, around $1,907 by the press time.

It’s worth noting that the XAU/USD weakness past $1,907 will need validation from the $1,900 threshold, a break of which could quickly push the quote toward the early January swing high near $1,865.

On the flip side, the aforementioned ascending resistance line, close to $1,951 at the latest, restricts the immediate upside of the Gold price.

In a case where the XAU/USD remains firmer past $1,951, the late March 2022 peak surrounding $1,966 and March 2022 high near $1,998 could probe the upside ahead of highlighting the $2,000 round figure for the metal buyers.

To sum up, Gold price appears to have left the door open for the bears but the road to the south appears long and bumpy.

Gold price: Four-hour chart

Trend: Pullback expected