Gold Price Forecast: XAU/USD rebounds from 29-month low above $1,600, falling wedge, US data eyed

• Gold price pares recent losses around multi-month low, snaps three-day downtrend.
• A light calendar, the wait for short-term key data allows traders to consolidate latest moves.
• Risk-off mood, firmer yields weigh on XAU/USD prices.
• US CB Consumer Confidence, Durable Goods Orders eyed to extend corrective bounce.

Gold price (XAU/USD) licks its wounds around a 2.5-year low, mildly bid near $1,627 during Tuesday’s Asian session, as the market’s risk-off mood ebbs amid a lack of major data/events. Even so, the market’s fears of recession and aggressive central bank actions keep exerting downside pressure on the metal prices ahead of the short-term key US data.

The market’s scathing rejection of the new tax-cut measures triggered the GBP/USD slump to an all-time low, pushing the Bank of England (BOE) towards taking emergency measures to defend the British currency from the further free fall. However, the BOE rejected readiness to help the Cable and renewed the US dollar’s safe-haven demand.

Elsewhere, the People’s Bank of China’s (PBOC) updates surrounding the increase in the Forex reserves tried to defend the gold buyers recently but failed amid the risk-off mood. On the same line could be the Bank of Japan’s (BOJ) praise for market meddling.

The sour sentiment pushed market players to demand a premium and pushed the Treasury yields towards the north, which joined the hawkish Fedspeak to propel the US dollar and weigh on the XAU/USD prices. Also portraying the risk-aversion was the downbeat performance of the global equities, tracked by Wall Street. Also exerting downside pressure on the gold price was the hawkish Fedspeak. Recently, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

That said, the latest inaction in the market, as traders take a breather after a long day amid a light calendar, is likely to fade over time as the US CB Consumer Confidence for September and Durable Goods Orders for August could entertain the traders.

Technical analysis

Gold price activates recovery from the 2.5-year low inside a weekly falling wedge bullish chart pattern. The corrective bounce, however, lacks follow-through amid sluggish RSI.

That said, the quote needs to cross the $1,642 hurdle to confirm the falling wedge breakout, which in turn could propel the XAU/USD, at least theoretically, towards the $1,710. The 200-HMA level surrounding $1,665 could act as an extra filter to the north.

Alternatively, pullback moves need validation from the latest swing low near $1,620, a break of which could direct gold price towards the $1,600 threshold and then to the 4.5-month-old descending support line, near $1,575 at the latest.

Gold: Hourly chart

Trend: Corrective bounce expected