Gold Price Forecast: XAU/USD downside opens up toward $1,885, eyes on Fed Minutes

Gold price is off the two-month lows of $1,896, attempting to recover ground above the $1,900 mark early Wednesday. The United States Dollar (USD) has entered an upside consolidative phase, allowing Gold buyers to breathe a sigh of relief ahead of the mid-tier US housing data and US Federal Reserve (Fed) Minutes of the July meeting.

Gold price remains vulnerable as US Dollar stays in vogue

The US Dollar continues to waver in a familiar range, consolidating the gains seen in the first half of the week, keeping the recovery attempts in the Gold price limited. The Greenback is benefiting from its safe-haven appeal, as investors remain concerned about the global economic growth outlook, especially after the recent awful data from China.

According to CNBC News, “China reported July data that broadly missed expectations. The National Bureau of Statistics (NBS) report also did not include the unemployment figure for young people, which has soared to record highs in recent months. Investors shunned riskier assets such as stocks and flocked to the safety of the US Dollar, as fears amplified that China’s dwindling post-Covid economic recovery could have spillover effects on the rest of the world, including the US economy.

The sell-off in the global stocks gathered steam after the United States Retail Sales report showed a bigger-than-expected growth in the country’s consumer spending. Markets began speculating more Fed tightening following the robust US retail trade data, suggesting a resilient US economy and more pain for the non-interest-bearing Gold price.

Looking ahead, the downside risks remain intact for Gold price amid a bearish technical setup on the daily chart and unnerved markets ahead of the eagerly awaited July Fed meeting’s Minutes, as it could throw fresh light on the Federal Reserve’s future policy path. Meanwhile, the US housing data will be also closely followed, as the Fed remains data-dependent in its policy approach.

Gold price technical analysis: Daily chart

On Tuesday, Gold price closed below the all-important 200-Daily Moving Average (DMA) at $1,905 for the first time since December 15, 2022, suggesting that it could be a beginning of a fresh downtrend for the coming months.

Adding credence to the bearish potential in Gold price, the downward-sloping 21 DMA is set to cut the 50 DMA from above, which could confirm a Bear Cross on a daily closing basis.

The immediate support is seen at the two-month low of $1,896, below which the June 29 low of $1,893 will be tested.

A sustained break below the latter will expose the March 15 low of $1,886.

Meanwhile, any pullback in the Gold price will be seen as a good selling opportunity.

Gold price needs to crack the $1,920 round figure to initiate any meaningful recovery. The next upside  target could be seen at $1,930 supply zone.