Gold Price Forecast: XAU/USD sees a downside to near $1,700, US Inflation hogs limelight

Gold price is declining towards $1,700.00 as hawkish Fed Powell weakened gold bulls.
The Fed is prepared to make growth sacrifices for bringing price stability.
Falling gasoline prices may weigh pressure on headline US inflation data.

Sagar Dua FXStreet

Gold price (XAU/USD) has displayed a less-confident pullback after a sheer downside move in the late New York session. The precious metal is expected to extend its weakness after dropping below the immediate support of $1,704.00. A downside break will drag the asset towards the psychological support of $1,700.00.

The gold prices witnessed a vertical drop after a hawkish speech from Federal Reserve (Fed) chair Jerome Powell. Fed Powell is ‘strongly committed to bringing price stability with odds of lower sacrifice in overall demand against prior instances of fighting inflation. Esteemed jobs demand sacrifices from growth prospects and the Fed is set to go all in to fix the inflation chaos.

Meanwhile, the US dollar index (DXY) has turned sideways as investors are shifting their focus toward the US Consumer Price Index (CPI) data, which will release on Tuesday. Well, the comments from US Treasury Secretary Janet Yellen on the inflation rate, citing that weaker gasoline prices may put further downward pressure on headline consumer price inflation for August, reported by Reuters, will trim the estimates for the headline inflation data.

Gold technical analysis

Gold prices are gyrating in 50% and 61.8% Fibonacci retracement placed at $1,709.87 and $1,705.53 respectively on the hourly scale. The touch points of the above-mentioned Fibo retracement are marked from Wednesday’s low at $1,691.47 to Thursday’s high at $1,728.27.

The 20-and 50-period Exponential Moving Averages (EMAs) are on the verge of displaying a bearish crossover at around $1,711.24.

Also, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range and will trigger a downside momentum on sliding into the bearish range of 20.00-40.00.

Gold hourly chart

XAU/USD

Overview
Today last price	1709.22
Today Daily Change	-9.16
Today Daily Change %	-0.53
Today daily open	1718.38

Trends
Daily SMA20	1743.11
Daily SMA50	1747.72
Daily SMA100	1800.25
Daily SMA200	1834.15

Levels
Previous Daily High	1719.54
Previous Daily Low	1691.47
Previous Weekly High	1745.58
Previous Weekly Low	1688.92
Previous Monthly High	1807.93
Previous Monthly Low	1709.68
Daily Fibonacci 38.2%	1708.82
Daily Fibonacci 61.8%	1702.19
Daily Pivot Point S1	1700.05
Daily Pivot Point S2	1681.73
Daily Pivot Point S3	1671.98
Daily Pivot Point R1	1728.12
Daily Pivot Point R2	1737.87
Daily Pivot Point R3	1756.19

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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