XAU/USD Retreats To $1,900: Can Gold Price Sustain Its Rally As Markets Doubt China

 GOLD prices have declined for two days after reaching their peak in April 2022, dropping 0.20% intraday. Sellers are staying close to $1,910 on Tuesday morning. GOLD prices dropped on Monday as the US Dollar Index recovered from its seven-month low and yields on US Treasury bonds strengthened.
Even though China’s strong economic data had a positive effect, market sentiment was still negative, thereby pulling down the XAU/USD. In terms of data, China posted a 0.0% quarter-on-quarter (QoQ) increase in its gross domestic product (GDP) in Q4, which was lower than the predicted figure of -0.8% but higher than the previous figure of 3.9%.

According to the latest figures, industrial production saw a 1.3% year-on-year growth in December, surpassing the estimated 0.5% growth and outperforming the 2.2% prior reading. Similarly, retail sales showed an improvement of -1.8% compared to the projected -7.8%, and a better performance than the previous figure of -5.9%.
Though the data provided by the China National Bureau of Statistics (NBS) points to economic recovery, it should be noted that the foundation for this recovery still needs to be secured. The upbeat economic data from China went unaccepted by the market, squandering hopes for a more pessimistic outcome due to the pandemic. Coupled with the NBS’ comments, this weighed down on investor sentiment and gold prices against the US dollar.
Also, the Federal Reserve’s (Fed) previous dovish stance has been somewhat changed by the US’s positive sentiment indicators and Friday’s rise in inflation expectations. This has caused US Treasury bond yields to rise again.
After that, gold traders should monitor US economic data such as the NY Empire State Manufacturing Index for January, which is forecast to be at -4.5 compared to -11.2 previously. The major focus will be on US retail sales for December, where a figure of 0.1% YoY is expected versus the -0.6% of the previous month’s results in order to ascertain clearer directions.

It is important to note that the $1,900 level can provide immediate downside support, while the 200-HMA near $1,878 could be tested by XAU/USD bearish market participants afterward. The price of XAU/USD is currently limited to a maximum of $1,923 due to its lower line at the stated channel.
This puts a cap on its immediate upside. After witnessing a slight upward shift from the price level of $1,947 last Thursday, the gold traders could face some pressure before cracking the April 2022 peak price of $1,998.