Gold Price Forecast: XAU/USD bears eye $1,800 ahead of Fed’s preferred inflation data

• Gold Price prints four-day downtrend despite recent rebound from intraday low.
• US dollar retreat, two-week-old support line restrict immediate downside.
• Bulls need validation from market sentiment, US PCE Price Index data.

Gold Price (XAU/USD) licks its wounds around the intraday low of $1,815 as traders await the key US data during early Thursday morning in Europe. Even so, the risk-off mood exerts downside pressure on the bullion.

The metal’s hesitance to decline further could be linked to the US dollar’s pullback from the highest levels in two weeks. That said, the US Dollar Index (DXY) retreats to 104.99 while snapping a two-day rebound at the highest levels in a fortnight.

The greenback’s losses appear linked with the fresh uptick in the US Treasury yields. the US 10-year Treasury yields snap a two-day downtrend as the key bond coupons rebound from the weekly low to 3.10%, up one basis point (bp) by the press time.

It should be noted, however, that the downbeat prints of the US stock futures and fears that the inflation woes will last longer, which in turn could trigger a recession, seem to exert downside pressure on the Gold Price.

Recently, the first major US bank to call the recession, namely Deutsche Bank, signaled that the US inflation could keep disappointing the Fed.

On Wednesday, the major central bankers’ readiness to battle inflation, even at the cost of short-term economic slowdown, drowned market sentiment and XAU/USD.

Among them, Fed Chairman Jerome Powell repeated his latest pledge to battle inflation with readiness to announce another 0.75% rate hike if needed. The Fed Boss also praised the US economic strength and helped the US dollar to remain firmer. It’s worth noting that Powell’s comments suggesting challenges for US jobs data during the battle with inflation appears to have weighed on the risk profile of late.

Looking forward, the US the Core Personal Consumption Expenditure (PCE) Price Index, expected 0.4% MoM versus 0.3% prior, will be an important catalyst to watch for short-term directions.

Also read: US PCE Inflation May Preview: Inflation becomes moot

Technical analysis

Gold Price extends pullback from the 61.8% Fibonacci retracement (Fibo.) of May 16 to June 12 upside amid sluggish MACD signals and downbeat RSI line, not oversold.

That said, the precious metal sellers presently flirt with a six-week-long support line near $1,814 with eyes on the monthly bottom surrounding $1,805.

Following that, the $1,800 round figure and the yearly low of $1,786 could lure XAU/USD bears.

On the contrary, an upside break of the 61.8% Fibo. level of $1,822 could escalate the corrective pullback towards a convergence of the 50% Fibonacci retracement level and a fortnight-old resistance line, near $1,833.

Also acting as an upside hurdle is the 200-SMA and the mid-month monthly peak, respectively near $1,840 and $1,858.

Gold: Four-hour chart

Trend: Further weakness expected