Gold Price Forecast: $1,800 – two steps away, will Powell power XAUUSD bears?

Gold Price failed to sustain the rebound and turned south in the American session on Tuesday, having booked the second straight daily loss. In doing so, the bright metal cracked the critical demand area, although growing recession fears helped put a floor. The bullion staged a decent comeback in the first half of the day, as the dollar remained broadly sluggish amid a positive shift in risk sentiment. Risk flows returned after China announced a reduction in the quarantine period for international travelers, as Beijing and Shanghai reported zero covid cases after four months. The metal climbed to test the $1,830 level amid broad dollar weakness while the uptick in US Treasury yields capped the rebound.

The tide, however, turned in favor of the dollar bulls and smashed gold price back to the $1,820 support after the US Conference Board's Consumer Confidence index hit its lowest since February 2021, dampening investor optimism and reviving worries over the recession. Surging oil prices rekindled inflation fears, which added to the dour mood and boosted the greenback at gold’s expense.

Gold Price is struggling to find demand so far this Wednesday, as traders appear non-committal and refrain from placing any directional bets on the metal ahead of the Policy Panel of the heads of the Fed, ECB and BOE at the annual ECB Forum on central banking. The discussions between the key central bank officials will hold the key to shaping up the market expectations of policy normalization, which could have a significant impact on the non-yielding gold.

Apart from the ECB Summit, the US final GDP revision and OPEC+ decision will be closely eyed for fresh cues on the broader market sentiment.

Gold Price Chart: Daily

As observed on the daily chart, gold price closed Tuesday below the rising trendline support at $1,820.25, confirming a two-week old pennant breakdown.

The downside break opens floors towards the $1,800 threshold. However, Friday’s low of $1,1817 and June 15 low of $1,808 could come to the rescue of bulls before.  

The 14-day Relative Strength Index (RSI) continues to hover below the midline, suggesting that sellers will remain in charge going forward.

On the flip side, buyers need to recapture the pennant support turned resistance, now at $1,822, above which a decent bounce towards the $1,838 area cannot be ruled out. That price zone is the convergence of the short-tern critical 21-Daily Moving Average (DMA) and the pennant resistance.

Further up, the mildly bullish 200 DMA at $1,845 will challenge additional recovery moves. The bearish 50 DMA at $1,853 will be the last line of defense for XAU sellers.