Gold Price Forecast: XAU/USD stays on the way to $1,807 support ahead of US PCE inflation

• Gold fades bounce off six-week-old support line amid recession fears.
• Powell repeats the latest hawkish commitments to keep the USD firmer.
• China’s official PMIs, Fed’s preferred inflation gauge will be crucial for immediate directions.

Gold Price (XAU/USD) struggles to defend the previous day’s bounce off short-term key support during Thursday’s Asian session. In doing so, the yellow metal remains indecisive around $1,818 by the press time.

The yellow metal dropped to the lowest levels in two weeks the previous day after the key central bankers remained firm in their determination to battle the inflation woes, even at the cost of short-term economic slowdown.

Fed Chairman Jerome Powell mostly 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. ECB President Christine Lagarde, on the other hand, signaled chances of a heavier rate increase in September while also expecting positive growth rates. Further, BOE Governor Andrew Bailey raised concerns about real income shock.

Talking about data, the final readings of the Q1 US Gross Domestic Product Annualized dropped to -1.6% versus the initial forecasts of -1.5%. The Personal Consumption Expenditure (PCE) Prices, on the other hand, rose more than 7.0% expected and prior readings to 7.1% during the stated period.

In addition to the hawkish central banks and mixed US data, geopolitical and trade-linked fears surrounding Russia and China also weighed on the sentiment, as well as on the Gold Price.

Amid these plays, Wall Street closed mixed and the US Treasury yields dropped for the second day. It’s worth noting that the S&P 500 Futures remain downbeat and the US bond coupons also stay pressured by the press time.

Looking forward, XAU/USD traders will pay attention to China’s NBS Manufacturing PMI and Non-Manufacturing PMI for June for immediate directions. Following that, the Fed’s preferred version of inflation, namely the Core Personal Consumption Expenditure (PCE) Price Index, for May, expected to rise to 0.4% from 0.3% MoM, will also be important to watch.

Technical analysis

Gold trades sustainably below the 10-DMA and a nine-day-old resistance line. Given the bearish MACD signals and steady RSI, the prices are likely to decline further.

However, an upward sloping support line from May 16 restricts the immediate downside near $1,815, a break o which could quickly fetch the XAU/USD towards six-week-old horizontal support near $1,807.

Following that, a south-run towards the $1,800 threshold and then to the yearly low near $1,786 can’t be ruled out.

Alternatively, 10-DMA and the aforementioned immediate trend line resistance, respectively near $1,827 and $1,832, could restrict gold price recovery.

It’s worth noting that the 50-DMA level of $1,850 holds the key to the XAU/USD bull’s entry.

Gold: Daily chart

Trend: Further downside expected