Gold Price Forecast: XAU/USD drops sharply post failing to reclaim $1,950 as hawkish Fed bets rebound

Gold price has dropped firmly after failing to tap the $1,950.00 resistance amid a recovery in hawkish Fed bets.
S&P500 futures have recovered some of their losses added in Asia, however, the overall market mood is still cautious.
US Yellen believes that inflation can be arrested while maintaining an upbeat labor market.

Sagar Dua FXStreet

Gold price (XAU/USD) has witnessed a steep fall after failing to kiss the crucial resistance of $1,950.00 in the European session. The precious metal has attracted significant offers as the corrective move in the US Dollar Index (DXY) seems concluded due to an improvement in odds for the continuation of the rate-hiking spell by the Federal Reserve (Fed).

S&P500 futures have recovered some of their losses added in Asia, however, the overall market mood is still cautious as investors are worried that more interest rate hikes by the Fed would worsen the economic outlook.

US Treasury Secretary Janet Yellen stated on Wednesday that robust consumer spending has kept the United States economy resilient. She feels that inflation can be arrested while maintaining an upbeat labor market, with unemployment in the 4% range, up slightly from the 3.7% reading in May, as reported by Reuters.

The odds for one more interest rate hike from the Fed rebounded after former Richmond Fed President Jeffrey Lacker cited current interest rates at 5.0-5.25% should rise to 6% in order to bring down sticky inflation.

The USD Index is expected to remain choppy as the economic calendar has nothing much to offer this week. Economists at MUFG believe that consolidation at these stronger US Dollar levels seems most likely given the probable declining appetite for position-taking ahead of a key week next week with the US Consumer Price Index (CPI) data and the FOMC and European Central Bank (ECB) meetings.

Gold technical analysis

Gold price has formed a textbook-traced Darvas Box chart pattern on a four-hour scale, which indicates a volatility contraction, followed by a one-way move. The precious metal is consolidating in a range of $1,932-1,985 for the past three weeks. Broadly, horizontal support is plotted from March 15 high at $1,937.39.

The magical 200-period Exponential Moving Average (EMA) at $1,975.47 is acting as a strong barrier for the Gold bulls.

The Relative Strength Index (RSI) (14) is hovering near 40.00 and a break below the same will trigger the bearish momentum.

Gold four-hour chart

XAU/USD

Overview
Today last price	1943.24
Today Daily Change	3.29
Today Daily Change %	0.17
Today daily open	1939.95

Trends
Daily SMA20	1969.9
Daily SMA50	1990.55
Daily SMA100	1940.31
Daily SMA200	1839.01

Levels
Previous Daily High	1970.23
Previous Daily Low	1939.9
Previous Weekly High	1983.5
Previous Weekly Low	1932.12
Previous Monthly High	2079.76
Previous Monthly Low	1932.12
Daily Fibonacci 38.2%	1951.49
Daily Fibonacci 61.8%	1958.64
Daily Pivot Point S1	1929.82
Daily Pivot Point S2	1919.7
Daily Pivot Point S3	1899.49
Daily Pivot Point R1	1960.15
Daily Pivot Point R2	1980.36
Daily Pivot Point R3	1990.48

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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