• Gold price looks to resume the recovery towards $1,750.
  • Recession fears dominate ahead of the Fed and US earnings.
  • Recent weakness in yields, 4H technical setup remain supportive.

Gold price is reversing an early dip but remains cautious at the start of the critical Fed week. The rebound in the US dollar from over two-week lows capped the bullion’s ongoing recovery momentum. The greenback climbed on the back of renewed risk-off flows, triggered by a revival of recession fears, as the Fed remains on track to hike rates by 75 bps to control inflation. Investors remain worried over a potential negative US GDP print in the second quarter, which would tip the world’s largest economy into a technical recession.

Additionally, traders remain ahead of earnings from the tech giants such as Google’s Alphabet Inc. and technology titan Apple Inc. The aggressive Fed tightening path could weigh negatively on the tech titans, significantly impacting the market mood, dollar valuations and, in turn, the gold price.

Also read: Gold, Chart of the Week: XAU/USD bulls are moving in trying to catch the falling knife

The bright metal extended its recovery from 16-month lows and hit fresh weekly highs at $1,739 on Friday, tracking the slump in the US Treasury yields, as growth and inflation worries sapped investors’ confidence and boosted the safe-haven flows into the government bonds. The broad risk-aversion also helped the dollar stage a late rebound from two-week lows. A contraction in the eurozone and German business PMIs combined with dwindling US services sector activity amplified recession risks and weighed negatively on risk sentiment.

Gold price technical outlook: Four-hour chart

Having tested the 100-Simple Moving Average (SMA), now at $1,738 on the four-hour chart last Friday, gold price has entered a phase of upside consolidation. The bright metal is gathering strength for a sustained move above the latter.

The 21 SMA is approaching the 50 SMA to potentially validate a bull cross in the upcoming sessions. The Relative Strength Index (RSI) is pointing north above the midline, suggesting that there is some room for the recovery to extend.

Above 100 SMA, bulls will aim for the horizontal targets aligned at $1,745 and $1,752.

After spotting a symmetrical triangle breakdown on the four-hour chart on Wednesday, gold price extended the downside and hit the pattern target measured at $1,781.

On the flip side, if bears take out strong support around $1,713, the confluence zone of the 21 and 50 SMAs, then a drop towards the $1,700 mark cannot be ruled out.

The multi-month troughs of 1,681 will be back on XAU sellers’ radars.

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