Gold Price Forecast: XAU/USD to consolidate below $1,860 as investors await Fed’s Powell

Gold price (XAU/USD) has delivered a four-day winning streak after displaying a bullish reversal at around $1,800.00 last week. The precious metal is expected to turn sideways after a firmer responsive buying action as more market participants will connect with bulls for further upside.

A softer US dollar index (DXY) is the real catalyst behind the $40+ rally in gold prices. The DXY has eased around 2.80% after hitting a high of 105.00 despite rising odds of a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in June. Mounting inflationary pressures in the US economy are compelling for one more rate hike by the Federal Reserve (Fed) in June. Also, the speech from Fed chair Jerome Powell on Tuesday may provide some insights into the likely monetary policy action in June.

The upbeat market tone is responsible for a sheer downside move in the DXY. Risk-sensitive currencies are gaining traction as DXY’s safe-haven appeal diminishes.

Gold technical analysis

On an hourly scale, XAU/USD is holding above 23.6% Fibonacci retracement (placed from April 18 high at $1,998.43 to May’s low at $1,804.90) at $1,837.60. Gold bulls are firmer above the 200-period Exponential Moving Average (EMA) at $1,840.40. The trendline placed from May’s low at $1,804.90 will act as major support for the counter. A pullback move is expected towards the above-mentioned trendline after a bullish reversal to near $1,840.00. The Relative Strength Index (RSI) (14) has shifted lower from the bullish range of 60.00-80.00 but is expected to find support at 40.00.

Gold hourly chart