Gold Price Forecast: XAU/USD needs a weekly close above key $1,920 barrier to extend recovery

• Gold price extends rebound, as China optimism offsets recent US Dollar gains.
• Subdued US Treasury bond yields also support Gold price ahead of fresh US data.
• Gold price approaches key confluence resistance at $1,920, will it break through?

Gold price is building on the previous recovery early Friday, marching toward $1,920, as it moves further away from the three-week low of $1,901 set Thursday. With the US Retail Sales and inflation data now out of the way, Gold investors look out for the preliminary UoM Consumer Sentiment data alongside the end-of-the-week flows for placing their trades.

Pre-Fed repositioning, US data to impact Gold price

Gold price is trading firmer on Friday, as China’s policy support measures and strong business activity data boost the market mood and weigh on the safe-haven demand for the US Dollar, limiting its recent upsurge.

The People’s Bank of China (PBOC) lowered the bank’s Reserve Requirement Ratio (RRR) and the 14-day Reverse Repo rate, in an effort to stimulate the dwindling economic performance while the country’s Retail Sales and Industrial Production increased more than expected in August.

Further, a sluggish sentiment around the US Treasury bond yields is also providing additional support to the non-yielding Gold price.

On Thursday, encouraging US Retail Sales, Producers Price Index and the Jobless Claims showed further signs of economic resilience in the United States, which reinforced bets that the US Federal Reserve (Fed) could deliver one more interest rate hike by the year-end. August Retail Sales came in better than expected, jumping 0.6% against a 0.2% increase expected. US annual PPI rose 1.6% in August, compared with the expectations for a 1.2% rise.

Amidst the renewed hawkish Fed expectations, the US Dollar witnessed a fresh rally alongside the US Treasury bond yields, smashing Gold price to fresh three-week lows. However, the downside in the Gold price was capped by a risk-on rally in the global stocks after the European Central Bank (ECB) delivered a dovish rate hike, signaling the end of its tightening cycle. Also, American traders cheered the successful IPO of Arm, which instilled confidence in the country’s capital markets.

Looking forward, a fresh batch of US economic data, including the Industrial Production, UoM Consumer Sentiment and Inflation Expectations data will be closely watched for fresh US Dollar valuations. However, the end-of-the-week flows and position readjustments will remain in play ahead of next week’s critical Fed policy announcements.

Gold price technical analysis: Daily chart

Gold price has managed to bounce off the $1,900 mark, looking to recapture the critical resistance zone at $1,920, which the confluence of the bullish 21- and 200-Daily Moving Averages (DMA).

Weekly closing above the latter will confirm a bullish reversal from three-week troughs, reopening the door for a test of the 50 DMA at $1,932. Further up, the psychological $1,950 level will be challenged.

Conversely, if the abovementioned strong resistance at $1,920 holds, Gold price could see a retracement toward the $1,900 threshold.

 Gold sellers need to crack the latter to initiate a fresh downtrend toward the static support at $1,885.

The 14-day Relative Strength Index (RSI) indicator is edging higher but remains below the 50 level. This suggests that any upside attempts are likely to be short-lived.