Gold Price Forecast: XAU/USD refreshes day’s low near $1,740, Jackson Hole hogs limelight

Gold price (XAU/USD) displayed an inventory distribution profile, oscillating in a narrow range of $1,745.02-1,749.15 but has given a downside break and has refreshed its day’s low at $1,744.00 in the Asian session. The precious metal has continued its five-day losing streak after surrendering Friday’s low of $1,745.59. The yellow metal is likely to remain on the tenterhooks as investors are awaiting Federal Reserve (Fed)’s commentary on policy guidance.

Considering the Fed minutes, the hawkish tone may trim as price pressures are reaching their peak levels and the consequences of shrinking liquidity from the US economy could display its true colors later. To maintain balance, a rate hike by 50 basis points (bps) looks optimal. Also, “Most economists in an Aug. 16-19 Reuters poll have predicted a half percentage point hike next month, the same as in the last poll, which would take the key interest rate to 2.75%-3.00%.”

This week, the cues from US Durable Goods Orders will also provide insights into the overall demand. As per the market consensus, the economic data is likely to decline to 0.6% from the prior release of 2%. In times, when the US economy has already displayed an unchanged US core Consumer Price Index (CPI), a decline in the economic data is not lucrative for the US dollar index (DXY).

Gold technical analysis

Gold prices have declined to near 50% Fibonacci retracement (placed from July 21 low at $1,680.91 to August 10 high at $1,807.93) at $1,744.70 on an hourly scale. The downward sloping trendline placed from August 12 high at $1,804.00 will act as major resistance for the counter.

The 50-period Exponential Moving Average (EMA) at $1,755.00 is declining firmly, which adds to the downside filters. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which favors more downside ahead.  

Gold hourly chart