Gold Price Forecast: Bear flag, hawkish Federal Reserve concerns tease XAU/USD sellers

Gold price (XAU/USD) struggles to extend week-start recovery moves as it makes rounds to $1,875 during Thursday’s Asian session, following the three-day uptrend. The lack of buying interest in the yellow metal could be linked to the hawkish Federal Reserve (Fed) comments, as well as statements highlighting inflation fears from the United States diplomats. However, receding woes of the US-China ties and a light calendar probes the XAU/USD bears even as the technical analysis tease the Gold sellers.

Federal Reserve officials probe Gold buyers

Having witnessed upbeat United States employment and activity data, the Federal Reserve (Fed) officials including Chairman Jerome Powell renewed inflation fears and allowed the US Dollar Index (DXY) to regain upside momentum, following the week-start retreat from the monthly peak. The same joins an absence of major positives from elsewhere to probe the Gold price upside.

That said, Fed Governor Christopher Waller teased a long fight with a 2.0% inflation target by citing expectations of tighter monetary policy for longer than expected. New York Federal Reserve President John Williams was almost on the same line while saying that the labor market is still very strong and noted that they have more work to do on rates, adding data will determine the path of rate hikes. Fed Governor Lisa Cook said that the central bank remains focused on restoring price stability, as inflation is still running too high. She added that they would need a restrictive monetary policy for some time.

United States diplomats also challenge XAU/USD rebound

Not only did the Federal Reserve (Fed) officials who flagged inflation fears and probe the Gold price but the United States diplomats were also highlighting concerns that challenge the XAU/USD upside. Among them, US Treasury Secretary Janet Yellen mentioned, “While inflation remained elevated, there were encouraging signs that supply-demand mismatches were easing in many sectors of the economy.” Elsewhere, US President Joe Biden said during a PBS interview that there will be no US recession in 2023 or 2024. The same allows the Fed to defend its hawkish bias amid inflation woes and challenge the recovery in the Gold price.

Sino-American issues entertain Gold traders

While the inflation woes and the United States growth concerns weigh on the Gold price, the easing fears surrounding the fresh tension between the US and China defend the XAU/USD buyers. Recently, the ex-Fed Chair Jannet Yellen mentioned that it was important to improve communications with Chinese counterparts on economic issues, which in turn eased the US-China tension which escalated on the weekend news of the US shooting a Chinese balloon and terming it a spy. Further, US President Joe Biden also tried placating the Sino-American tussle as he said, “We intend to compete completely with China but we are not seeking conflict, as that has been the case so far.”

A light calendar to track

Looking forward, multiple statistics from Europe relating to inflation and growth may entertain the Gold traders on Thursday. The reason could be linked to the European Central Bank (ECB) officials’ hawkish commentary and a lack of support from the data that can weigh on the US Dollar Index, favoring the XAU/USD bulls in turn, in case of strong economics. The same also highlights the US Weekly Initial Jobless Claims.

Gold price technical analysis

Gold price (XAU/USD) remains inside the weekly ascending trend channel while portraying a “Bear flag” bearish chart pattern on the hourly formation.

Adding strength to the bearish bias over the XAU/USD are the downbeat signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as the steady Relative Strength Index (RSI) line placed at 14.

That said, a downside break of $1,870 appears necessary for the Gold sellers’ conviction while the weekly bottom surrounding $1,860 can act as an extra filter towards the south.

Following that, the theoretical target of the stated “Bear flag”, around $1,780, gains the XAU/USD bear’s attention.

Alternatively, the 100-Hour Moving Average (HMA) guards the Gold’s immediate upside near $1,880 before the stated flag’s top line surrounding $1,888.

In a case where the Gold price remains firmer past $1,888, the bearish chart pattern gets rejected and the XAU/USD bulls could aim for the 200-HMA hurdle of $1,905.

Gold price: Hourly chart

Trend: Downside expected