• Gold price picks up bids refresh intraday high as softer yields, DXY favor commodity buyers.
• Stimulus hopes, mixed data and doubts over 100 bps Fed rate hikes favor XAU/USD buyers of late.
• US Retail Sales, Michigan CSI should be strong to recall US dollar bulls, reverse the metal’s recovery.

Gold price (XAU/USD) picks up bids to refresh intraday high near $1,670, extending the previous day’s rebound from a fortnight low, as global markets turn cautiously optimistic ahead of Friday’s key US consumer-centric data. Also likely to favor the metal prices could be the recently softer US Treasury yields, as well as a lack of negatives in Asia.

While portraying the mood, US 10-year Treasury yields keep the late Thursday’s pullback from the highest levels since October 2008 while the two-year and 30-year bond coupons also retreat from the multi-year tops by the press time. Additionally, the S&P 500 Futures and equities in the Asia-Pacific shares track Wall Street’s gains at the latest.

Behind the moves could be the Asian policymakers’ rejections of higher rates, especially from Japan and China, as well as the hopes of further stimulus from Beijing and London. Also likely to have favored the market sentiment, and the XAU/USD, could be the US dollar’s failure to defend the bulls amid softer Treasury yields. That said, the US Dollar Index (DXY) drops for the second consecutive day to 112.40 by the press time.

It’s worth mentioning that the markets fully price in the Fed’s 75 bps move and the same could be read as no major welcome for the 100 bps rate hike in the next meeting, which in turn might have drowned the DXY amid the, “buy the news, sell the fact,” pattern.

Looking forward, risk catalysts will be crucial for the XAU/USD traders to watch for fresh impulse ahead of the US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October.

Given the market’s surprise reaction to the upbeat US inflation data, the scheduled US consumer-centric numbers will be cautiously traded.

Technical analysis

Gold price pokes the 100-HMA after successfully bouncing off the 61.8% Fibonacci retracement of the metal’s late September to early October moves. The recovery also takes clues from the firmer RSI (14), not overbought, to keep buyers hopeful.

However, a four-day-old horizontal resistance area surrounding $1,682-84 precedes the 200-HMA level of $1,690 to challenge the XAU/USD’s short-term upside.

Alternatively, a downside break of the $1,658 immediate support, comprising the stated golden of the Fibonacci tool, could recall sellers targeting a downside break of the two-week-old horizontal support zone, close to $1,640.

Overall, gold may print a short-term recovery but the bulls must cross 200-HMA to regain the market’s confidence.

Gold: Hourly chart

Trend: Limited upside expected