Gold Price Forecast: XAU/USD consolidates below multi-month top, bullish potential intact

Gold price struggles to capitalize on the previous day's rally of around 2% and hits a hurdle near the $1,822-$1,824 region, or its highest level since late June touched earlier this month. The intraday dip, however, turns out to be short-lived and stalls near the $1,811 area. The XAU/USD turns neutral during the early North American session and remains at the mercy of the US Dollar price dynamics.

Modest US Dollar downtick offers support to Gold price

In fact, the US Dollar Index (DXY), which measures the Greenback's performance against a basket of currencies, surrenders its modest gains amid a fresh leg down in the US Treasury bond yields. This, in turn, is seen as a key factor lending some support to the US Dollar denominated Gold price. The upside potential for the XAU/USD, meanwhile, seems limited amid the risk-on impulse and the prospects for further policy tightening by major central banks, including the Federal Reserve (Fed).

Hawkish central banks might continue to cap Gold price

It is worth recalling that the US central bank struck a more hawkish tone and indicated that it will continue to hike interest rates to combat stubbornly high inflation. Furthermore, the European Central Bank (ECB), the Bank of England (BoE), the Reserve Bank of Australia (RBA), and the Reserve Bank of New Zealand (RBNZ) have signalled that more hikes were likely. This, in turn, might hold back traders from placing aggressive bullish bets around the non-yielding Gold price and cap gains.

Recession fears could act as a tailwind for Gold price

That said, growing recession fears, amid a surge in COVID-19 cases in China and geopolitical risks, could benefit the safe-haven Gold price. In the latest development surrounding the Russia-Ukraine saga, Ukrainian President Volodymyr Zelensky travels to the United States to meet President Joe Biden. Russia, meanwhile, says that there is no chance of peace talks and that the continued arms supplies by Western allies to Ukraine would lead to a deepening of the ongoing conflict.

Focus shifts to important macro data from the United States

Traders might also prefer to wait for a fresh catalyst from this week's important macro data from the United States. The final US Q3 GDP print is scheduled for release on Thursday. The focus will then shift to the US Core PCE Price Index (the Federal Reserve's preferred inflation gauge), which should provide some meaningful impetus to Gold price ahead of the year-end holiday season.

Gold price technical outlook

From a technical perspective, acceptance above the very important 200-day Simple Moving Average (SMA) favours bullish traders. The constructive set-up is reinforced by the fact that oscillators on the daily chart are holding comfortably in the positive territory and are still far from being in the overbought zone. That said, it will still be prudent to wait for some follow-through buying beyond the multi-month top, around the $1,822-$1,824 region, before positioning for any further gains.

On the flip side, the $1,812-$1,810 horizontal resistance breakpoint now seems to protect the immediate downside. Any further pullback could attract fresh buyers near the $1,800 mark, which, in turn, should help limit the downside near the 200-day SMA. The latter is currently pegged near the $1,786 area and should act as a strong base for the Gold price, which if broken decisively might negate the near-term positive outlook.

Key levels to watch