Gold Price Forecast: XAU/USD tests a three-day low at around $1,730 as US Dollar attempts a recovery

Gold price (XAU/USD) has declined sharply to near $1,730.00 in the Tokyo session as the risk impulse is displaying mixed responses ahead of the release of the Federal Open Market Committee (FOMC) minutes. The precious metal is witnessing sheer volatility as FOMC minutes will also provide clues about the interest rate guidance. However, the detailed explanation behind hiking interest rates by 75 basis points (bps) for the fourth time consecutively will remain crucial.

Meanwhile, the US dollar index (DXY) has displayed signs of recovery after dropping to near the round-level support of 107.00.

Outside the West, the Reserve Bank of New Zealand (RBNZ) has gone for a bigger rate hike amid its battle against mounting inflation. RBNZ Governor Adrian Orr ditched the 50 bps rate hike regime and went for a rate hike of 75 bps, in line with the expectations.

The commentary from RBNZ Governor indicated that policymakers were also considering a full percent rate hike. Although the Federal Reserve (Fed) is expected to slow down its rate hike pace, other central banks are still bidding for bigger hikes as inflation is still a reason for worry.

Gold technical analysis

On a four-hour scale, the gold price has sensed selling pressure after testing the 23.6% Fibonacci retracement (placed from November 3 low at $1,616.39 to November 15 high at $1,786.55) at $1,746.67. Also, the 20-period Exponential Moving Average (EMA) at around $1,747.00 has acted as a major barricade for the counter.

Meanwhile, the Relative Strength Index (RSI) (14) is hovering around the bearish range of 20.00-40.00. A slippage inside the bearish range will trigger a bearish momentum.

Gold four-hour chart