XAU/USD Price Forecast: Gold Trades Sideways As Investors Weigh Fed And China Headlines

The GOLD price consolidates recent losses, printing slight gains around $1,875 early Monday, the first good day in three all around one-month low. While doing so, the yellow metal applauds the US Dollar’s incapacity to maintain its strength and draws cues from the US-China spat ahead of this week’s big events.

However, the US Dollar Index (DXY) is still hovering around 103.00, despite a two-day comeback from its lowest levels since April 2022. As a result, the greenback’s index against the six major currencies struggle to justify the good US jobs report and geopolitical concerns over China.

The weekend news that a US military fighter jet knocked down a suspected Chinese surveillance balloon off the coast of South Carolina weighed on sentiment, and US Secretary of State Antony Blink canceled his previously scheduled travel to Beijing as a result of the incident. In a response to the event, China President Xi Jinping called this as a ‘obvious overreaction’.

This, together with a solid US employment report and ISM Services PMI data published on Friday, is putting pressure on the XAU/USD bulls prior of Fed Chair Jerome Powell’s speech on Tuesday.

Among these bets, the S&P 500 Futures extended the previous day’s decline from the highest levels since August, falling 0.30% intraday near 4,140 by press time. In the same vein, US 10-year Treasury note rates rose for the third day in a row, reaching 3.56% as of press time, marking the greatest weekly increase since late September 2022.

It is important to note that a lack of key data appeared to have spurred the XAU/USD bounce from short-term support, but GOLD purchasers should be cautious in the face of lately hawkish Fed worries and US-China tensions. The US UoM Consumer Sentiment Index for February, in addition to the University of Michigan’s 5-year Consumer Inflation forecasts, will also be closely watched on Friday.

Gold Technical Outlook

GOLD price declined strongly to achieve our main awaited target of $1,878.80 and surpasses it to try to stay above it, paving the way for more expected bearish in the upcoming sessions, to visit $1,828.70 areas in the near term, noting that having stepped above $1,878.80 will stop the current pressure drop and lead the price to try to regain agai