Gold Price Forecast: XAU/USD extends its downside below $1,950 ahead of US PMI, Fed’s Powell speech

Gold price (XAU/USD) extends its downside and trades in negative territory for the sixth consecutive day during the early Asian trading hours on Monday. The renewed US Dollar (USD) demand exerts some selling pressure on USD-denominated Gold price. The precious metal currently trades near $1,846, losing 0.12% on the day. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, holds above 106.25 after retracing the low of 105.65 on Friday.

The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. The annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with the estimation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market expectations.

On the weekend, China’s manufacturing activity grew into positive territory. The Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in September from the previous reading of 51.0, below the market consensus of 51.2. However, this figure failed to boost gold price.

Furthermore, the US passed bills to prevent a government shutdown following Friday's session, extending funding until November 17. This, in turn, lifts the US Dollar and drags XAU/USD lower.

Gold traders will monitor the US ISM Manufacturing PMI for September due on Monday. Also, Fed Chair Powell’s speech could offer hints about potential interest rate hikes. Traders will take cues from these events and find trading opportunities around the gold price.