Gold Price Forecast: XAU/USD seeks cushion above $1,780 as Fed policy outlook muddles US Dollar

Gold price (XAU/USD) is looking to build a cushion around the immediate support of $1,782.00 in the Asian session. The precious metal was corrected after failing to surpass the critical hurdle of $1,790.00. Gold price is displaying mixed responses as uncertainty over the policy outlook by the Federal Reserve (Fed) has turned the market mood cautious.

The US Dollar index (DXY) is hovering around 105.30 in the Tokyo session. The street is having mixed views on Fed’s policy outlook. Upbeat Nonfarm Payrolls (NFP) and robust demand in the service sector have shown strength in the United States economy while expectations for higher interest rate guidance are triggering recession fears.

Meanwhile, S&P500 futures have carry-forwarded their subdued performance, portraying a precautionary mood until any potential trigger could provide decisive guidance. The Gold price could deliver a rally in the first quarter of CY2023 as economists at the National Bank of Canada are of the view that a policy change from the FOMC would set the stage for a more prolonged decline in the Greenback.

Gold technical analysis

Gold price is seeking a cushion around the horizontal support placed from December 2 low at $1,778.5 on an hourly scale. The 20-period Exponential Moving Average (EMA) is acting as a major cushion for the asset.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the 40.00-60.00 range. It would be early calling it a reversal, however, the Gold price has surrendered upside momentum.

Gold hourly chart