Gold Price Forecast: XAUUSD plunges below $1,900 ahead of US Consumer Confidence and Durable Goods Orders

• XAU/USD finds a short-lived cushion near $1,895.00 after the carnage on Monday.
• The aggressive gestures from Fed policymakers have already prepared investors for a jumbo rate hike.
• On Tuesday, US Consumer Confidence and Durable Goods Orders will remain in focus.

Gold (XAU/USD) has witnessed a sheer downside since Monday after slipping below the previous consolidation zone placed in a narrow range of $1,936.78-1,958.37. The precious metal has fallen like a house of cards as investors have started pricing in a tight liquidity environment, which will stay for a longer horizon, going forward. The gold prices are oscillating near their potential cushion levels at around $1,895.40. The asset has witnessed slight support but the price action is advocating more weakness in the counter.

The pessimism in the gold prices is marked by soaring inflation in the US economy. The US Consumer Price Index (CPI) has reached multi-decade highs along with the second booster of the tight labor market has already featured a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed). Well, as per the dictation by Fed chair Jerome Powell in his testimony at the International Monetary Fund (IMF) meeting; a jumbo rate hike is imminent while investors will further focus on the status of balance sheet reduction. Squeezing liquidity from the economy at a faster pace is the need of the hour and Fed policymakers are likely to exploit each measure.

Going forward, the precious metal is likely to dance to the tunes of the US Consumer Confidence and Durable Goods Orders release, which are due on Tuesday. A preliminary reading for the monthly Durable Goods Orders is 1% against the prior print of -2.1%.

Gold Technical Analysis

On a four-hour scale, XAU/USD is trading near its potential demand zone, which is placed in a narrow range of $1,891.38-1,896.31. A bear cross, represented by the 20- and 200-period Exponential Moving Averages (EMAs) at $1,940.00 adds to the downside filters. Meanwhile, the Relative Strength Index (RSI) (14) has established in a 20.00-40.00 range, which signals the strength of the sellers.

Gold four-hour chart