Gold Price Forecast: $1,885 remains in sight for XAU/USD sellers amid a Bear Cross

Gold price is trading close to three-month lows, just a hairline short of the  1,900 mark early Thursday, as United States Dollar (USD) is extending the two-day recovery mode amid increased hawkish US Federal Reserve (Fed) expectations and ahead of a fresh batch of mid-tier US economic data releases.

Global central bankers, United States bank stress results underpin US Dollar

The US Dollar received a double booster shot, with a prevalent cautious market mood induced by the global central bank heavyweights' resolve to fight inflation by keeping up with interest rate increases this year. Speaking at the 2023 ECB Forum on Central Banking on Wednesday, major central bank bosses, including Fed Chair Jerome Powell, European Central Bank (ECB) Chief Christine Lagarde, Bank of England Governor (BoE) Governor Andrew Bailey and Bank of Japan (BoJ) Governor Kazuo Ueda, collectively cemented expectations of more tightening, as they struggle to tame inflation.

Concerns about the impact of higher borrowing costs for a longer period weighed on markets and infused safe-haven flows into the US Dollar and the US government bonds. As a result, the US Treasury bond yields came under intense selling pressure, barring the two-year Treasury bond yields. Markets currently price an 82% chance the Fed will raise interest rates by 25 basis points (bps) in July.

The US Dollar is also cheering the encouraging results from the United States Fed annual bank stress test. “The large banks are well positioned to weather a severe recession and continue to lend to households and businesses even during a severe recession,” the Fed’s stress test results revealed. The underlying upbeat tone around the US Dollar is boding ill for the USD-denominated and non-yielding Gold price.

Looking ahead, Gold traders look to a raft of economic data releases from the United States, including the final revision to the Gross Domestic Product (GDP) print, weekly Jobless Claims and Pending Home Sales, for fresh cues on the state of the US economy, which will significantly impact the Fed interest rates outlook. Ahead of that, Fed Chair Jerome Powell’s appearance at the Fourth Conference on Financial Stability hosted by the Bank of Spain in Madrid will hog the limelight. Further, the preliminary inflation reports from Spain and Germany will influence the market sentiment and the US Dollar and Gold valuations.

Gold price technical analysis: Daily chart

Gold price awaits the confirmation of the impending Bear Cross on a daily closing basis, as the downward-sloping 21-Daily Moving Average (DMA) has cut the 100 DMA from above.

Adding credence to the downside bias, the 14-day Relative Strength Index (RSI remains vulnerable below the midline, suggesting that the path of least resistance for Gold price is down. 

The immediate support is foreseen at the $1,900 threshold, below which a fresh downswing toward the March 15 low of $1,886 cannot be ruled out.  

Conversely, strong resistance is pegged near the $1,920 region, above which Gold buyers need to recapture $1,930 for a sustained recovery.

The next critical resistance is at the confluence of the 21 and 100 DMAs, near $1,943.