Gold Price Forecast: XAU/USD hangs near one-month low amid stronger US Dollar

Gold price meets with some supply near the $1,872 region, or the 100-hour Simple Moving Average (SMA), and stalls its modest intraday recovery from over a one-month low touched this Friday. The XAU/USD is currently placed in neutral territory, just above the $1,860 level, and is influenced by a combination of diverging forces.

Stronger US Dollar acts as a headwind for Gold price

The US Dollar (USD) stands tall near its highest level since January touched earlier this week amid the prospects for further policy tightening by the Federal Reserve (Fed). This, in turn, is seen acting as a headwind for the US Dollar-denominated Gold price. That said, the prevalent risk-off environment - as depicted by a generally weaker tone around the equity markets - lends some support to the safe-haven XAU/USD and helps limit the downside, at least for the time being.

Federal Reserve’s hawkish signals also cap Gold price

Investors now seem convinced that the Fed will stick to its hawkish stance and the expectations were reaffirmed by a slew of Federal Open Market Committee (FOMC) members this week. In fact, policymakers, including Fed Chair Jerome Powell, stressed the need for additional interest rate hikes to fully gain control of inflation. This, in turn, pushes the US Treasury bond yields higher, which underpins the Greenback and further contributes to capping the non-yielding Gold price.

Recession fears help limit losses for safe-haven XAU/USD

Market participants, meanwhile, remain concerned about economic headwinds stemming from the continuous rise in borrowing costs. Recession fears are further fueled by the deeply inverted US Treasury yield curve. In fact, the difference between two-year and 10-year US Treasury notes was the widest since the early 1980s on Thursday. This, in turn, tempers investors' appetite for riskier assets and lends some support to Gold price, warranting caution before positioning for further losses.

Focus shifts to consumer inflation figures from United States

Traders might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of the latest consumer inflation figures from the United States (US), due for release next Tuesday. In the meantime, the Preliminary US Michigan Consumer Sentiment Index, along with a scheduled speech by Fed Governor Christopher Waller, could provide some impetus to Gold price. Nevertheless, the XAU/USD seems poised to settle nearly unchanged for the week, just above the 50-day SMA.

Gold price technical outlook

From a technical perspective, acceptance below the $1,855 region (50-day SMA) will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Gold price could then slide to the next relevant support near the $1,830 area en route to the $1,818-$1,817 zone and the $1,800 round figure.

On the flip side, momentum beyond the $1,875 hurdle is likely to meet with a fresh supply ahead of the $1,900 mark. The latter should act as a pivotal point, above which a bout of a short-covering could lift the Gold price to the $1,925-$1,930 congestion zone.

Key levels to watch