Gold Price Forecast: XAU/USD eases below $1,850, focus on falling wedge, Fed’s Powell

  • Gold holds lower grounds inside a bullish chart pattern.
  • Risk appetite weakens amid pre-Powell anxiety, yields, S&P 500 Futures pare recent gains.
  • Powell’s ability to justify the biggest rate hike since 1994 could favor XAU/USD bears.

Gold (XAU/USD) prints mild losses around $1,830 as sour sentiment weighed on the precious metal during Wednesday’s Asian session. Even so, the commodity prices remain inside a bullish chart pattern ahead of Fed Chair Jerome Powell’s key Testimony.

S&P 500 Futures and the US 10-year Treasury yields portray the market’s cautious mood while pausing the latest run-up and exerting downside pressure on the gold prices. That said, the US equity futures drop 0.20% while the benchmark bond coupon falls two basis points (bps) to 3.28% by the press time.

In addition to the pre-Powell anxiety, chatters surrounding Fed’s rate hikes and the US recession could also be held responsible for the market’s latest risk-off mood, which in turn weighs on the XAU/USD.

Recently, US President Joe Biden and Treasury Secretary Janet Yellen tried to convince markets that the recession fears aren’t inevitable. Further, Richmond Federal Reserve President Thomas Barkin said that there will be no rapid return for the U.S. economy to the experience of the previous decade of stable growth, jobs and inflation, Reuters reported.

It should be noted that the strong performance of Wall Street, after the biggest weekly fall in two years, joined downbeat US data, to try to tease gold buyers the previous day. That said, US Existing Home Sales dropped to the lowest levels in two years when talking the annualized number. Further, the Chicago Fed National Activity Index also dropped to 0.01 in May versus a revised down 0.04 prior.

Moving on, Powell’s art of defending the tighter monetary policies and the rate hikes will be crucial for the gold traders and can recall the bears. However, fears of disappointment can’t be ruled out considering Fed Chair’s latest inabilities to please the bulls.

Also read: Gold Price Forecast: Bears retain control but need a catalyst

Technical analysis

Gold Price dribbles around the lower line of the weekly falling wedge bullish formation after multiple failures to cross the 100-HMA.

The repeated bounces off the immediate $1,828 support join steady RSI to keep buyers hopeful.

However, the 100-HMA and the stated bullish pattern’s resistance line, respectively around $1,838 and $1,842, hold the key for the metal’s further upside, a break of which could quickly propel XAU/USD towards the latest swing high near $1,857.

Alternatively, a downside break of $1,828, short-term horizontal support near $1,813 can probe the gold bears before directing them to the monthly low near $1,805.

Gold: Hourly chart

Trend: Further recovery expected

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