• Gold price struggles around a three-month high, after posting a bearish candlestick.
• Federal Reserve officials challenge United States inflation-led optimism.
• Jitters surrounding China also test Gold prices amid a light calendar.
• Downside risk appears escalating amid the US Dollar rebound.

Gold price (XAUUSD) remains depressed at around $1,770 while justifying the previous day’s bearish candlestick formation, as well as sluggish market conditions, during Tuesday’s Asian session.

The yellow metal’s latest weakness could also be linked to the mixed comments from the US Federal Reserve (Fed) officials, as well as fears surrounding China. It should be noted, however, that a light calendar also offers trading filters for the Gold price.

Federal Reserve officials challenge optimism over the Gold price

Having promoted the easy rate hikes and teased pivot talks in the last week, the US Federal Reserve policymakers began the week on a mixed footing as Vice-Chair Lael Brainard favored 50 bps rate hike but also stated, “We have additional work to do.” Earlier on Monday, Federal Reserve Governor Christopher Waller also promoted the ideal of a 0.50% rate hike while also warning against the market’s perception of the pivot. Such comments from the US Federal Reserve officials tame optimism surrounding future policy moves and renewed the US Dollar's strength.

Headlines from China also tease Gold price downside

China is the largest customer of bullion and hence the latest mixed headlines from the dragon nation probe the Gold price. Recently, US President Joe Biden and his Chinese counterpart Xi Jinping talked face-to-face for the first time in three years and tried to promote healthy competition, which in turn should have favored the Gold price. However, the thorny issue surrounding Taiwan soured the optimism surrounding the event.

Elsewhere, China’s easing of some of the Covid restrictions and help to the real-estate sector joins the jump in the daily coronavirus numbers to challenge the Gold traders.

US Treasury yields are the key

Given the US Treasury yields’ rebound underpinning the US Dollar’s comeback, the Bond coupons will be crucial to watch for clear directions, especially amid mixed updates and a light calendar. Should the bond bears keep fearing recession and hold control, the Gold price is likely to remain firmer. That said, the benchmark US 10-year Treasury yields remain unchanged near 3.86% by the press time.

US inflation expectations are important too

It’s worth noting that an increase in the New York Federal Reserve’s (Fed) inflation expectations appeared to have renewed the US bond selling and hence headlines surrounding price pressure should also be watched for near-term Gold price directions. As a result, today’s US Producer Price Index (PPI) for October, expected 8.3% YoY versus 8.5% prior, should be watched carefully to aptly forecast the near-term Gold price moves.

Technical analysis

Gold price justifies the previous day’s bearish Doji candlestick, as well as the oversold conditions of the Relative Strength Index (RSI), located at 14, while printing mild losses.

That said, the Gold price could approach September’s high surrounding $1,735 during further downside, as the Moving Average Convergence and Divergence (MACD) also appears to ease the bullish bias.

However, the previous resistance line from late April, around $1,703 at the latest, could challenge the further downside of the Gold price.

Alternatively, a daily closing beyond the previous day’s high near $1,775 could recall the bullion buyers.

Even so, a convergence of the 200-DMA and multiple levels marked since mid-May, around $1,805-08, appears a tough nut to crack for the Gold price to cross before convincing the buyers.

Gold price: Daily chart

Trend: Further downside expected