Gold Price Forecast: XAU/USD downside bias remains intact whilst below 100 DMA at $1,942

Gold price is consolidating the previous rebound while defending $1,930 so far in Thursday’s trading. The United States Dollar (USD) is meandering in monthly lows, awaiting fresh cues from the US economic data and Fedspeak.

Federal Reserve Chair Jerome Powell rescues Gold buyers

US Federal Reserve (Fed) Chair Jerome Powell’s testimony disappointed the US Dollar bulls alongside the US Treasury bond yields, allowing Gold price to stage an impressive recovery on Wednesday. Powell offered little surprises during his testimony about the Fed’s Monetary Policy Report before the House Financial Services Committee and repeated the message delivered at last week’s policy meeting that further US rate increases are "a pretty good guess" of where the Fed is heading if the economy continues in its current direction.

Markets had priced in more hawkishness from the Fed chief, and hence, his words triggered a US Dollar sell-off instead, with the US Dollar Index hitting fresh monthly lows at 102.00 while Gold price rebounded firmly from three-month lows of $1,919. US stocks slumped despite the usual message from Powell, as he still indicated higher rates for a longer period. The Wall Street sell-off failed to offer comfort to the safe-haven US Dollar.

Earlier in the day, in anticipation of Powell’s testimony, markets remained risk averse and buoyed the sentiment around the Greenback, downing Gold price toward the March 17 low of $1,918. Gold price was also weighed down by expectations of more tightening by global central banks, especially after the hot United Kingdom Consumer Price Index (CPI) inflation data strengthened the Bank of England's (BoE) hawkish expectations.

That said, Thursday’s Bank of England policy announcements hold the key for a significant impact on risk sentiment, influencing the US Dollar and Gold trades. The UK central bank is widely expected to hike rates by 25 basis points (bps) to 4.75%, but the BoE’s outlook on further rate hikes and the voting composition will be closely scrutinized for new clues.

Besides, the United States' weekly Jobless Claims and Existing Home Sales data will be eyed alongside day 2 of Fed Chair Powell’s testimony. Powell will testify on Thursday before the Senate Banking Committee and is expected to repeat Wednesday’s words. A couple of other Fed policymakers will also speak later in American trading, with any hawkish remarks likely to fuel a US Dollar turnaround at the expense of the Gold price.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price tested the March 17 low at $1,918 after breaking the one-month-old range to the downside on Tuesday below the critical 100-Daily Moving Average (DMA) at $1,942.

However, Gold buyers jumped near multi-month lows on bargain hunting and propelled rates back toward the latter. Acceptance above the 100 DMA is needed to initiate any meaningful recovery attempts.

Note that the 14-day Relative Strength Index (RSI) stays bearish, justifying the bearish potential in the Gold price. Therefore, a retest of the March 17 low at $1,918 remains well on the cards, below which a fresh downside will open up toward the $1,900 mark. The $1,910 round level could offer some respite to Gold buyers beforehand.

Alternatively, if a correction kicks in, Gold price could aim for the bearish 21 DMA at $1,952 on a sustained break above the 100 DMA at $1,942.  Further up, the $1,960 mark could challenge the bearish commitments.