XAU/USD rallied towards $1,905, despite failed US yields and weak US dollar

• Gold points about $ 1900.
• The Empire State Manufacturing Index fell in New York, raising expectations for a Fed shift.
• Gold Price Preview: Evening Star candlestick pattern indicates more declines in store.

gold price It retreated from daily highs near $1,920 and dropped below the $1910 signal, targeting $1900 amid risk aversion momentum. Despite the fact that the US dollar (USD) continues to trade at a loss and returns bonds US Treasuries are flattening, and non-yielding metals are losing momentum. At the time of writing, XAU/USD was trading at $1,906.69.

Gold remains on the defensive, despite the US dollar’s offer

Risk aversion is the name of the game as US stocks plunge. US corporate earnings are one reason for the bad mood. US economic data published by the Federal Reserve Bank of New York (Fed) showed deteriorating manufacturing activity and business conditions. Speculation about a possible Fed turnaround has improved, with traders anticipating a 25 basis point rate hike in the February 1 decision.

Regarding the latter, sources commented by Bloomberg, “The Fed will have reached its final federal funds rate in the first quarter, and investors can begin to react to the incoming data without lensing what the best outcome will mean.” newsletter for monetary policy. Good news for the economy can become good news for the markets.”

Apart from that, the dollar index, which measures the dollar’s value against a basket of six currencies, lost 0.12% and traded at 102.440. The 10-year Treasury yield is 3.533%, virtually unchanged and on par with previous losses.

US data reported that manufacturing activity in New York fell to its lowest level in January, with a sharp contraction in business activity, and the index fell 22 points to -32.9. The Inform showed that new orders and shipments dropped significantly, while delivery times remained unchanged and inventories rose.

What should be considered?

On Tuesday, the US economic agenda will be led by the President of the Federal Reserve Bank of New York, John Williams, who will report the news. On Wednesday, the calendar will include retail sales, prices paid by producers (IPP), and new data from feed it.

Gold Price Forecast: The Technical Perspective

From a technical perspective, the daily chart of the XAU/USD pair shows the formation of a three candlestick pattern known as the evening star. Monday’s price action formed a doji, followed by a drop on Tuesday to $12. However, a daily close around $1,905 or lower is needed to confirm the pattern’s validity, suggesting that the yellow metal could push for a break below $1,900.

If this scenario plays out, the first support for XAU/USD will be at $1,900. Breaking the latter would reveal last Friday’s low at $1892.40, followed by the January 11 high at $1886.63 and $1870.