Gold Price Forecast: XAU/USD looks to extend range play above $1,650 ahead of Powell

• Gold price remains vulnerable amid hawkish Fed outlook, geopolitical risks.
• End-of-the-week flows, profit-taking in the USD could help XAU/USD recover.
• XAU/USD could keep its range trade intact, with Powell’s speech next of note.

Gold price is trading on a slippery slope, as the US dollar and the Treasury yields consolidate their recent upsurge to swing highs. Expectations that the Fed will keep rates higher for longer remain in play, keeping the non-interesting bearing bullion on the backfoot. Investors stay cautious amid looming geopolitical tensions surrounding Russia and the West over Ukraine amidst mounting global recession fears.

The tepid market mood is boding well for the safe-haven dollar. Should risk aversion deepen on the release of the global business PMIs, it could propel the dollar at gold’s expense. However, the main event risk for Friday remains a speech by Fed Chair Jerome Powell due later in the NA session. it will be his first appearance after Wednesday’s rate hike decision and, therefore, will be closely followed.

Also read: Gold Price Forecast: XAU/USD downside remains compelling amid hawkish Fed  – Confluence Detector

XAU/USD ended marginally lower on Thursday, snapping the post-Fed rebound, as hawkish rate hike prospects-induced relentless rally in the US Treasury, which weighed on the yieldless metal. Although the downside remained cushioned, as the US dollar changed course and corrected sharply after USD/JPY was heavily sold off into the Japanese intervention in the FX market to stem the yen falls. The BOE hiked its policy rates by 50 bps against increased expectations of 75 bps, which also helped gold price to stay afloat.

Gold price technical outlook: Daily chart

Gold price has continued to find strong buyers around the $1,655 region so far this week but sellers continue to lurk above $1,680, leaving the bullion directionless in a defined range.

The range play is likely to extend on the final trading day of the week, as bears await a fresh catalyst for the next leg lower.

The 14-day Relative Strength Index (RSI) is sidelined just above the oversold territory, justifying the lackluster action in the price while keeping the downside bias intact

Sellers need to find a strong foothold below the 2022 low of $1,654 to challenge the $1,650 psychological level.

A fresh downtrend will kick in on a sustained breach of the latter, with a test of the $1,600 mark inevitable going forward.

Conversely, the immediate upside is guarded by the falling trendline resistance at $1,679. Any recovery attempts will need acceptance above the recent range highs near $1,685.

The next line of defense for sellers is placed at around $1,700. At that level, the bearish 21-Daily Moving Average (DMA) collides.

Further up, bulls will then aim for the September 14 high of $1,707.