Gold Price Forecast: XAU/USD tumbles below the 20 DMA, targets the YTD low below $1,620, ahead of Fed meeting

• Gold tumbles and extends its yearly losses, eyeing the YTD low at around $1,615.
• Broad US dollar strength ahead of the Federal Reserve meeting keeps the precious metals segment under pressure.
• US ISM Manufacturing PMI and JOLTs Opening, eyed on Tuesday, before Fed’s decision.

Gold price slides for the second consecutive day as the US dollar advances, ahead of the Federal Reserve Open Market Committee (FOMC) meeting, which is widely expected to deliver the last jumbo-size rate hike of the US central bank, amidst growing speculation for a Fed pivot, while recession fears increased. At the time of writing, the XAU/USD is trading at $1,637 a troy ounce, down by 0.39%.

XAU/USD falls on a buoyant US Dollar, underpinned by elevated US T-bond yields.

Global equities remain under pressure. Inflation in the Eurozone reached a record high of 10.7% amidst an ongoing economic slowdown in the block, which weakened the EUR, and underpinned the USD. The greenback got bolstered by US Treasury yields rising, while the 3-month/10-year yield curve spread briefly inverted during the last week. According to BBH analysts, “the signal is impossible to ignore, and that is the US economy is moving closer to a recession within the next 12 months, give or take.”

Data-wise, the US economic docket featured the Chicago PMI, which decreased to 45.20, below estimates of 47, adding to the list of Federal Reserve regional indices, painting a recessionary scenario. Of late, the Dallas Fed Manufacturing Business Index dropped below 0 to -19.4, lower than estimates of -17.4.

Aside from this, the Institute for Supply Management (ISM) will be reported the Manufacturing PMI for October on November 1, with estimates at 50, below the previous month’s 50.9. Of note, particular attention would be to prices paid by companies and employees, which would signal if the US economy continues to expand or begins to feel the shock of higher interest rates. Last month’s readings were 68.7 and 53.0, respectively.

The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, climbs 0.84% to 111.592, while the US 10-year benchmark note rate sits at 4.042%.

The US calendar will release the ISM Manufacturing PMI for October, JOLT’s opening, and the Federal Reserve’s monetary policy decision ahead of the week.

Gold Price Forecast (XAU/USD): Technical outlook

The yellow metal tumbled below last week’s low of $1638.40, exacerbating its fall to fresh two-week lows at around $1633.53. The Relative Strength Index (RSI) in the daily chart is headed downward, meaning that sellers remain in charge, though they will face solid support at around $1617, ahead of the YTD low at $1614.92. If buyers would like to shift gold bias to neutral, they need to reclaim the 50-day Exponential Moving Average (EMA) at $1682.69.