Gold Price Forecast: XAU/USD rebound pokes $1,770, focus on recession, Fed Minutes
- Gold Price portrays a corrective pullback near the lowest levels in seven months.
- Fears of economic slowdown join firmer US dollar to weigh on prices, market’s inaction triggered mild bounce.
- Fed Minutes need to confirm hawkish for favoring bears, US ISM Services PMI appears important too.
- Inverted cup-and-handle formation hints at the metal’s further downside.
Gold Price (XAU/USD) consolidates the biggest daily fall in three weeks around $1,770, refreshing intraday high to $1,772 during Wednesday’s Asian session. Even so, the precious metal remains below the key support-turned-resistance after confirming the bearish inverted cup-and-handle formation the previous day.
Growing fears of global recession joined speculations that China may recall covid-led lockdowns to weigh on the gold prices the previous day. The pessimism intensified after Germany and Italy flashed economic warnings while the Bank of England (BOE) also released a report conveying the grim economic outlook.
On the same line was China’s mass covid testing announcement. Additionally, strong prints of the US Factory Orders for May also propelled concerns about Fed's aggressive rate hikes and contributed to the market's pain.
That said, the US Dollar Index (DXY) rallied to the highest levels in 20 years as the US traders returned from the long weekend, which in turn drowned the Gold Price. In addition to the rush for risk safety, the DXY also benefited from the better-than-forecast US Factory Orders for May, to 1.6% MoM versus 0.5% expected and upwardly revised 0.7% previous readings.
Amid these plays, Wall Street closed mixed and the S&P 500 Futures print mild gains while the US Treasury yields remain pressured near a one-month low.
Moving on, recession updates are the key for gold traders while the Federal Open Market Committee (FOMC) Minutes and the US ISM Services PMI for June will offer additional directions.
Also read: FOMC June Minutes Preview: Opportunity for dollar correction?
Technical analysis
Gold Price licks its wounds after confirming the bearish chart pattern called inverted cup-and-handle, by a clear downside break of the $1,875 support.
Although oversold RSI favors the quote’s corrective pullback, the metal prices remain weak until crossing the $1,785 hurdle. Even so, the mid-June swing low and 100-EMA, respectively near $1,805 and $1,820, could test the XAU/USD bulls.
Also acting as an upside filter is a three-week-old descending resistance line near $1,823.
Meanwhile, gold’s fresh weakness needs validation from the latest multi-month low around $1,763.
Following that, the theoretical target of $1,690 could lure the XAU/USD bear’s attention.
Gold: Four-hour chart
Trend: Bearish