Gold Price Prediction: XAU/USD nears $1,850 resistance on China, yields favor DXY decline

Gold price (XAU/USD) shows modest increases near $1,840 as traders lick their wounds during Thursday's early slow activity. In doing so, the precious metal recovers from its largest daily decline in two weeks by drawing cues from cautious market optimism and a weakening U.S. dollar.

However, news reports concerning China and the U.S. debt ceiling appear to have supported the recent improvement in the risk profile. Consequently, Chinese President Xi Jinping crossed wires while demonstrating his willingness to expand industrial and investment cooperation with Asia. According to Chinese official media, he was followed by optimistic remarks from Chinese Finance Minister Liu Kun, who stated that 2023 fiscal revenue will increase this year, albeit at a moderate rate. Moreover, the chatter surrounding the US debt-ceiling crisis, as warned by the US Congressional Budget Office (CBO) on Wednesday according to Reuters, appeared to have raised hopes for a speedier resolution of the major issue in the coming days and probed the upward movement of US Treasury bond yields.

It should be noted that the World Gold Council's (WGC) update indicating China's massive Gold imports in 2022, the largest since 2018, appeared to have stabilized the XAU/USD exchange rate, particularly following the previous day's decline.

The US data-driven hawkish Fed bias and a rise in US Treasury bond yields appear to present the greatest threat to Gold buyers.

In this context, S&P 500 Futures post modest gains around 4,165 while extending yesterday's gains, while US 10-year Treasury note rates retreat following Wednesday's surge to a 1.5-month high, falling two basis points to approximately 3.78% as of press time. In spite of this, the US Dollar Index (DXY) fell 0.20% to 103.65 at the latest, after reaching a 1.5-month high the day before.

For new impetus, gold traders should focus on secondary US statistics about the housing market, industrial activity, and producer prices.