Gold Price Forecast: XAU/USD rebound eyes $1,750 on softer USD

• Gold prints corrective pullback from monthly low, fortnight-old support line in focus.
• US Treasury yields seesaw around 15-week high, DXY dwindles but S&P 500 Futures keep intraday gains.
• Fed tapering, China and Evergrande news weigh on sentiment, US debt limit talks eyed too.
• Gold Price Forecast: Bears aiming to retest the year low

Gold (XAU/USD) picks up bids to $1,740, up 0.33% intraday while keeping the rebound from early August levels.

The yellow metal dropped to the multi-day low the previous day as the US Dollar Index (DXY) tracked firmer Treasury yields. However, market consolidation amid mixed signals joins cautious mood ahead of the key events to underpin the commodity’s latest swing.

Although the St. Louis Federal Reserve President James Bullard copied the tunes of Fed Chairman Jerome Powell to reiterate the tapering song, fears over US President Joe Biden’s ability to convince Republicans over debt limit extension probe the USD buyers of late. On the same line was China’s waiver of Intellectual Property (IP) for the covid vaccine as well as optimism towards the US economic recovery versus China.

Recently, the global rating agency Fitch follows the global phenomena and cut the dragon nation’s credit rating from CC to C. Also speaking negatively for Chinese investors is the Reuters news that Japan's Government Pension Investment Fund (GPIF) will not invest in yuan-denominated Chinese government bonds due to settlement and liquidity issues.

Furthermore, doubts over Evergrande’s coupon payment and a lack of data/events in China, not to forget the US push to China to cut oil imports from Iran, also confuse the gold traders, helping them consolidate the latest losses.

That said, S&P 500 Futures rise 0.65% intraday, snapping a two-day fall, whereas the US 10-year Treasury yields seesaw around mid-June highs after rising for five consecutive days. Further, the US Dollar Index (DXY) remains sidelined around the 10-month top as the greenback traders seek fresh clues to break the monotony.

Looking forward, scheduled speeches from the Fed and the ECB policymakers will join the headlines concerning the US debt limit and China’s Evergrande to entertain gold traders.

Technical analysis

Gold struggles to pick up amid sluggish MACD and RSI lines, which in turn hints at further weakness towards retesting the two-week-old descending support line, around $1,727.

However, the RSI line can test the oversold region around then, limiting additional downside.

Ignorance of this could direct the quote to the $1,700 threshold before highlighting the yearly trough surrounding $1,687.

Meanwhile, recovery moves need to cross the immediate trend line hurdle near $1,745 before directing gold buyers to a descending resistance line from September 03, near $1,771.

Even if the quote manages to cross the $1,771 resistance line, a horizontal area established from September 08 and 200-SMA, respectively near $1,782 and $1,788, will challenge the metal’s upside.

Overall, gold remains pressured towards the yearly low but intermediate bounces can’t be ruled out.

Gold: Four-hour chart

Trend: Further weakness expected