Gold Price Forecast: XAU/USD bearish consolidation eyes $1,750 on firmer Treasury yields

• Gold stays pressured around intraday low, stretches pullback from two-week high.
• Market sentiment sours but Fed tapering concerns, firmer US data underpin US Treasury yields, DXY.
• US debt ceiling chatters, ADP Employment Change will be the key, not to ignore China headlines.

Gold (XAU/USD) takes offers around $1,755, down 0.30% on a day, ahead of Wednesday’s European session. In doing so, the precious metal drops for the second consecutive day as risk-off mood favors the US dollar.

US Dollar Index (DXY), a gauge of the greenback versus major currencies, also keeps the previous day’s rebound near 94.05, up 0.06% on a day by the press time. In doing so, the DXY takes clues from the firmer US 10-year Treasury yields, up 1.6 basis points (bps) near 1.547% at the latest.

It’s worth noting that the market sentiment remains cautiously optimistic, mildly weak of late, amid anxiety over the US stimulus and the debt limit extension, not to forget cautious mood before Friday’s US Nonfarm Payrolls (NFP).

US President Biden stays determine the tackle the key budget and relief package issues before the October 18 deadline despite the GOP rejection. The Democratic Party member recently said, per Reuters, “A carve-out of the filibuster for the debt limit is a real possibility.”

On the positive side, Moody’s intact US credit rating and Biden’s readiness to ease infrastructures spending bill’s cap keeps the market players hopeful. However, Republicans are firm on their demands and challenge the optimism.

Elsewhere, the news of the US Trade Representative’s (USTR) investigation over the exclusion of China imports joins US President Biden’s phone call with his Chinese counterpart and readiness to respect the Taiwan agreement to challenge the pessimists.

It’s worth mentioning that the Fed tapering chatters gained momentum after firmer US PMIs as well as hawkish comments from the US Federal Reserve (Fed) policymakers, which in turn support the US Treasury yields while weighing on the stock futures. Though, the record trade deficit in the US and recent challenge from the covid Delta variant, not to forget financial risks emanating from China, poke the hawks.

Amid these plays, market players will pay close attention to the risk catalysts and the US ADP Employment Change for September for fresh impulse ahead of Friday’s US Nonfarm Payrolls (NFP).

Technical analysis

Gold remains depressed between 200-EMA and 50-EMA, flirting with a one-month-old descending trend line of late.

Given the MACD line’s bearish cross and a descending RSI line, the bullion prices are likely to witness further downside pressure.

However, a clear break of 50-EMA and three-week-old horizontal support, around $1,755, becomes necessary for the gold sellers to tighten the grips. Following that, September’s bottom surrounding $1,721 will be in focus.

Alternatively, an upside run-up past $1,774, comprising 200-EMA, will aim for $1,787 before directing gold buyers toward the $1,800 threshold.

It’s worth noting that the mid-September swing high and the last monthly peak, near $1,808 and $1,834 act as tough barriers for the precious metal to cross past $1,800 if the bulls need to reclaim the fort.

Gold: Four-hour chart

Trend: Further weakness expected