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).