Gold Price Forecast: XAUUSD eyes first weekly loss in three on hawkish Federal Reserve speakers, risk aversion

Gold price (XAUUSD) stays bearish around $1,760, after a two-day downtrend, as sellers cheer the US Dollar’s rebound despite softer economics from the United States. In doing so, the precious metal bears observe the recently hawkish comments from the US Federal Reserve (Fed) officials, as well as the risk-negative catalysts, while bracing for the first weekly loss in three.

Federal Reserve officials recall Gold price sellers

Although the latest second-tier data from the United States came in mixed, mostly softer, the Federal Reserve policymakers’ resistance to reiterate the statements favoring the 50 bps rate hike in December favored the US Dollar and triggered the recent sell-off in the Gold price.

“US Federal Reserve's (Fed) monetary policy is not yet in a range estimated to be sufficiently restrictive to reduce inflation,” St. Louis Federal Reserve President James Bullard said on Thursday.

On the same line were the latest comments from Minneapolis Federal Reserve Bank President Neel Kashkari. “With inflation still high but a lot of monetary policy tightening already in the pipeline, it's unclear how high the US central bank will need to raise its policy rate,” said Fed’s Kashkari.

Talking about Thursday’s data from the United States, Philadelphia Fed Manufacturing Index fell to -19.4 versus -6.2 market forecasts and -8.7 prior. Further, Housing Starts declined by 4.2% MoM in October following September's 1.3% contraction whereas Building Permits fell by 2.4%, compared to a 1.4% increase recorded in the previous month. Additionally, the Jobless Claims eased to 222K for the week ended on November 11 versus 225K expected and upwardly revised 226K prior.

It’s worth noting that the previously released United States Retail Sales and Producer Price Index (PPI) for October could be linked to the Fed officials’ hawkish comments as both of them offered a positive surprise.

Risk catalysts also underpinned US Dollar demand and lured XAUUSD bears

Market’s fears also highlighted the US Dollar’s safe-haven demand and weighed on the Gold price. Among the major ones was the fresh tension between Russia and Ukraine due to missile strikes on Poland, as well as the increasing Covid counts in China.

Recently, Ukrainian President, Volodymyr Zelenskyy rejected the blames for the missile strike that hit a Polish city and killed two people. The  North Atlantic Treaty Organization (NATO) believes Russia was responsible even if the initial findings suggested that the missile likely coming from Ukraine’s defense.

On the other hand, China’s Coronavirus numbers reach more than a year’s high but the Dragon Nation eased a few of the virus-led activity controls. As a result, markets are worried about a fresh, as well as fierce, wave of the disease that drowned the global economy in the last two years. It’s worth noting that China is among the world’s top Gold consumers and hence and negatives from it should weigh on the XAUUSD prices.

Nothing major to challenge Gold price downside

Given the lack of major data/events, the Gold price could extend the latest weakness unless risk appetite improves notably, which is less likely. That said, the market’s recent risk-aversion could be witnessed via downbeat prints of Wall Street, despite the late rebound, as well as a recovery in the US Treasury yields. It's worth mentioning that the benchmark United States 10-year Treasury yields bounced off the six-week low on Thursday to around 3.78% at the latest.

Gold price technical analysis

A clear downside break of a two-week-old ascending trend line joins the retreat of the Relative Strength Index (RSI) placed at 14 from the overbought territory to keep Gold sellers hopeful of the precious metal’s further decline. Adding strength to the bearish bias could be the quote’s U-turn from the 61.8% Fibonacci retracement level of the June-September downturn.

That said, a 50% Fibonacci retracement level surrounding $1,746 and tops marked during September and October around $1,730 could restrict immediate downside.

However, a convergence of the 100 Daily Moving Average (DMA) and 38.2% Fibonacci retracement, around $1,715-13, could restrict the Gold price downside afterward.

Meanwhile, the 61.8% Fibonacci retracement and the aforementioned support line, now resistance, could restrict short-term recovery of the yellow metal around $1,779 and $1,786 in that order.

Above all, a horizontal area comprising the 200-DMA and multiple levels marked since May, near $1,805-08, appears a tough nut to crack for the Gold bulls.

Overall, the Gold price returns to the bear’s table after a fortnight holiday.

Gold price: Daily chart

Trend: Further weakness expected