Gold Price Forecast: XAUUSD sees a drop below $1,900 as DXY strengthens, US GDP in focus

• Gold price is looking vulnerable at around $1,900.00, eyes more downside after breaking the consolidation.
• The DXY has climbed above 102.00 despite weak US Durable Goods Orders.
• The formation of an Inverted Flag is dictating more weakness ahead.

Gold (XAU/USD) is oscillating in a minor range of $1,891.56-1,911.31 since Monday after an intense sell-off from Friday’s high at $1,955.71. The gold prices are stabilizing currently in a concise range but price action is favoring an extreme imbalance on the downside amid the rising US dollar index (DXY).

Soaring expectations of a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in May monetary policy is pushing the DXY higher like there is no tomorrow. The asset is exploding its all barricades swiftly and has climbed above the round level resistance of 102.00 firmly. Despite an underperformance from the economic data, the DXY is scaling higher. The US Census Bureau on Tuesday reported the monthly Durable Goods Orders at 0.8% lower than the market consensus of 1%. So it would not be wrong to claim that higher odds of a jumbo rate hike by the Fed have infused fresh blood into the DXY, also it is forcing the gold prices to remain vulnerable from the past few trading sessions.

Going forward, investors will focus on Thursday’s US Gross Domestic Product (GDP) numbers. A preliminary estimate for the yearly US GDP at 1.1%, advocates an underperformance in comparison with the prior print of 6.9%.

Gold Technical Analysis

On an hourly scale, XAU/USD is forming an Inverted Flag chart pattern that signals a consolidation phase after a swift downside move. In this consolidation phase, those investors participate who failed to enjoy the previous fall and those who prefer a continuation bet rather than a reversal. The 50- and 200-period Exponential Moving Averages (EMAs) at $1,910.23 and $1,935.43 respectively are scaling lower, which signals that a bearish trend is intact. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals a consolidation.

Gold hourly chart