Gold Price Forecast: XAU/USD hovers around $1,850 as DXY holds gains, Fed’s Powell eyed

Gold price (XAU/USD) is holding itself around $1,850.00 as the US dollar index (DXY) has moved higher in the Asian session after a bearish Monday. The precious metal is indicating volatility contraction as the asset has turned sideways in a $10 range from the previous trading session. A topsy-turvy move is highly expected from the bright metal as investors are awaiting the speech from Federal Reserve (Fed) chair Jerome Powell on Tuesday.

The speech from Fed’s Powell will dictate the likely monetary policy action in June’s interest rate decision announcement. Considering the elevated inflation levels and tight labor market, hawkish guidance is expected in the speech and the status of balance sheet reduction will be keenly watched.

Meanwhile, the DXY is witnessing some selling pressure after hitting a high of 102.32 in the Tokyo session. The asset has wiped off its 2.90% gains in the last few trading sessions after hitting a 19-year high of 105.00 on May 13.

Although the speech from Fed’s Powell will be the major event, investors will also focus on the S&P Global Purchase Managers Index (PMI) numbers. The Composite PMI is seen at 55.5 while the Manufacturing and Services PMI may land at 57.9 and 55.4 respectively.

Gold technical analysis

In today’s session, a directionless move is expected from the gold prices ahead of Fed Powell’s speech and US PMI numbers. The precious metal is likely to trade in a range of $1,847.07-1,865.47. Gold prices are overlapping the 20-period Exponential Moving Average (EMA) at $1,853.33, which signals a consolidation ahead. The Relative Strength Index (RSI) (14) has been established in a 40.00-60.00 range, which indicates a balancing auction.

Gold hourly chart