Gold Price Forecast: XAU/USD lacks upside momentum after post-Fed rise, focus on US GDP, ECB

Gold Price (XAU/USD) retreats from the weekly top, probing a two-day uptrend around $1,972 amid early hours of Thursday’s Asian session, as markets await more clues to defend the post-Federal Reserve (Fed) gains of the yellow metal. Also likely to have weighed on the XAU/USD could be the cautious mood ahead of the first readings of the US Gross Domestic Product (GDP) for the second quarter (Q2) and the European Central Bank’s (ECB) monetary policy meeting. Above all, the Federal Reserve and Chairman Jerome Powell’s inability to guide the market by meeting the 0.25% rate hike and leaving the door open for the September rate increase favored the Gold buyers before the pre-data anxiety prods the metal.

Gold Price edges higher as Federal Reserve, Powell fail to please US Dollar bulls

Gold Price refreshed weekly top after the US Federal Reserve (Fed) Interest Rate Decision, which matched the widely forecasted increase of 25 basis points (bps) to fuel the rate toward the multi-year high in the range of 5.25%-5. 50%. Following the rate decision, Fed Chairman Jerome Powell tried to placate the hawks by showing readiness for a September rate hike as he said, that the June inflation Consumer Price Index was welcomed but “was only one month's report.” It should be noted that the rejection of recession fears was also an effort to please the US Dollar buyers but failed.

Following the Fed event, the US Treasury bond yields and the US Dollar dropped, which in turn helped the Gold Price to remain firmer and refresh the weekly top around $1,978, before retreating amid cautious mood ahead of the top-tier data/events.

Mixed China headlines, United States data also favor XAU/USD bulls

Apart from the Fed-inspired run-up, the Gold Price also remains firmer as the biggest XAU/USD customer, namely China, shows readiness for further stimulus. It’s worth noting, however, that the fresh challenges to the US-China ties, due to Washington’s push for a law to keep China investments from the US companies in check, seem to prod the XAU/USD bulls of late.

Elsewhere, the Conference Board’s (CB) Consumer Confidence Index for July has been positive but the housing numbers for June are mixed. That said, the previously released inflation and employment clues haven’t been impressive. Even so, the International Monetary Fund (IMF) raised the US economic growth forecast for 2023 to 1.8% from 1.6% forecast in April.

ECB, US Q2 GDP eyed for Gold Price directions

Although the Gold Price is all set to register a fourth consecutive weekly gain, the ability of the European Central Bank (ECB) and the US Gross Domestic Product (GDP) for the second quarter (Q2) to renew the US Dollar upside and weigh on the XAU/USD can’t be ruled out. The same requires a close watch on these data/events. That said, US Durable Goods Orders for June and weekly Initial Jobless Claims also become important to watch for clear directions.

That said, the ECB is expected to follow the Fed while announcing a 0.25% increase in the benchmark interest rates. However, President Christine Lagarde’s ability to defend the hawks will be crucial to allow the Euro in staying firmer.

On the other hand, the advance reading of the US Q2 GDP Annualized is expected to ease to 1.8% from 2.0% while the Durable Goods Orders for June may also ease to 1.0% from 1.8% prior (revised). Both these data suggest challenges for the US Dollar and favor to the Gold Price and hence solid reaction to the positive surprise can’t be ruled out.

Gold Price Technical Analysis

Gold Price lures sellers as it fades the early-week rebound from the convergence of a 100-Exponential Moving Average (EMA) and a one-month-old rising support line, around $1,955 by the press time.

Also favoring the downside bias about the XAU/USD price could be the receding bullish power of the Moving Average Convergence and Divergence (MACD) indicator, as well as a retreat of the Relative Strength Index (RSI) line, placed at 14.

It’s worth noting, however, that a clear downside break of the $1,954 support confluence becomes necessary to convince the Gold sellers. Following that, a downward trajectory toward a two-month-old horizontal support zone near $1,930 and then to the previous monthly low of around $1,893 can’t be ruled out.

On the contrary, multiple tops marked since May 19 restrict short-term Gold Price upside near $1,985.

In a case where the Gold Price remains firmer past $1,985, the $2,000 round figure and March’s peak of around $2,010 will act as the final defense of the XAU/USD sellers.

Gold Price: Four-hour chart

Trend: Further downside expected