Gold Price Forecast: XAU/USD attempts stabilization above $1,820, Fed Powell in focus

Gold price (XAU/USD) has rebounded modestly after re-testing Tuesday’s low at $1,818.33 in the Asian session. The precious metal has attempted to contain $1,822.50 and is focusing to sustain above the critical support of $1,820.00. Investors should brace for extreme volatility in the gold prices in today’s session as the speech from Federal Reserve (Fed) Jerome Powell will provide hints about the likely monetary policy action in July.

No matter what inflation rate for June will be released by the US Bureau of Labor Statistics, the Fed will definitely announce a rate hike in July monetary policy meeting. What signifies more is the extent of the rate hike that will be dictated by the Fed. If we scrutiny the prior data, one thing is clear the former rate hikes by the Fed have failed to make any dent in the inflation rate. The price rise is stalwart at a four-decade high with a figure of 8.6% and Fed is ‘fully committed' to bringing price stability.

Meanwhile, the US dollar index (DXY) is hovering below 104.50 ahead of US Personal Consumption Expenditure (PCE). As per the market consensus, the PCE is seen stabled at 7%.

Gold technical analysis

The gold prices are trading in a Descending Triangle pattern that signals a volatility contraction. The downward sloping trendline is plotted from June 16 high at $1,857.58 while the horizontal support is placed from June 16 low at $1,815.73. The gold bulls have attached the 20-period Exponential Moving Average (EMA) at $1,821.22. Meanwhile, the Relative Strength Index (RSI) (14) has managed to reclaim the 40.00-60.00 range, which indicates that a fresh leg of downside move has been postponed for now.

Gold hourly chart