Gold Price Forecast: XAU/USD dips to six-month low on elevated US bond yields, remains below $1900

• Gold spot trims losses, trading at $1866.44, after US Treasury bond yields retract from multi-year highs, causing the USD to weaken.
• US GDP for Q2 meets expectations at 2.1%, with inflation dropping to 1.7%, below the previous 3.9%, indicating economic stability.
• Federal Reserve officials hint at potential further rate hikes if inflation progress stalls, adding another layer of uncertainty to gold’s outlook.

Gold spot tumbles as Wall Street closes, but earlier printed a six-month low of $1857.82, as US Treasury bond yields skyrocketed, a headwind for the yellow metal. Nevertheless, the XAU/USD trimmed some of its losses as US bond yields retraced. At the time of writing, the non-yielding metal trades at $1866.44 after hitting a daily high of $1879.58, down 0.49%

Gold prices experience a tumble, reaching a six-month low of $1857.82, as rising US Treasury bond yields and a strong USD are headwinds for the precious metal

Market sentiment improved on Thursday, while US Treasury bond yields retreated from multi-year highs of around 4.68% to 4.577%. Consequently, the Greenback (USD) is weakening, as portrayed by the US Dollar Index (DXY), down 0.49%, at 106.13.

Data in the United States (US) came as expected, particularly Gross Domestic Product (GDP) for Q2 on its final reading at 2.1%, aligned with the consensus but below the previous reading, which was upward revised to 2.2%. Inflation for the second quarter dropped to 1.7%, below the previous reading at 3.9%.

At the same time, the US Department of Labor revealed that Americans filing for unemployment on the week ending on September 23 rose by 204K, below estimates of 215K but more than last week’s 202K, portraying a robust labor market.  

Aside from this, Federal Reserve officials continued to cross newswires. Chicago Fed’s President Austan Goolsbee said if the US central bank sees lack of progress on inflation, it would have to raise rates further while saying he’s not decided what to do at the next meeting. Meanwhile, Richmond’s Fed President Thomas Barkin stated the latest five months of inflation data have been encouraging, though he commented that it’s too soon to say what’s next on monetary policy.

XAU/USD Price Analysis: Technical outlook

After dropping to a new cycle low on Wednesday, Gold slumped below $1860, but it remains shy of the March 8 swing low at $1809.48. It should be said a death-cross in Gold’s daily chart, formed since Tuesday, cementing the XAU/USD bearish bias, but If it achieves a weekly close below $1900, that could exacerbate a drop to the latter and $1800. Otherwise, the yellow metal could pose a threat and test the 20-day moving average (DMA) at $1916.57