Gold Price Forecast: XAUUSD remains depressed near weekly low ahead of Powell’s testimony

• Gold edged lower for the fourth successive day on Wednesday and dropped to a multi-day low.
• Fed rate hike bets underpinned the USD and exerted pressure on the dollar-denominated metal.
• The risk-off mood failed to lend support as the focus remains on Fed Chair Powell’s testimony.

Gold witnessed some selling for the fourth successive day on Wednesday and dropped to a four-day low, around the $1,823 region during the first half of the European session.

Investors seem convinced that the Federal Reserve would retain its aggressive policy tightening stance and raise interest rates at a faster pace to curb soaring inflation. In fact, the markets have been pricing in another 75bps rate hike at the next FOMC meeting in July. Hawkish Fed expectations extended some support to the US dollar, which, in turn, undermined demand for the dollar-denominated gold. Bulls seemed rather unimpressed by the prevalent risk-off mood, which tends to benefit the safe-haven XAUUSD.

The market sentiment remains fragile amid doubts that major central banks could hike interest rates to curb soaring inflation without affecting economic growth. This, along with global supply chain disruptions caused by the Russia-Ukraine war and the recent COVID-19 outbreak in China, continued fueling recession fears. The worsening global economic outlook weighed on investors' sentiment, which triggered a fresh wave of the global risk-aversion trade and led to a steep fall in the equity markets.

Apart from a stronger greenback, the downfall could further be attributed to some technical selling amid repeated failures near the very important 200-day SMA over the past two trading sessions. It, however, remains to be seen if bears are able to retain control or refrain from placing aggressive bets ahead of Fed Chair Jerome Powell's semi-annual testimony before the Senate Banking Committee. Market participants will look for fresh clues about the Fed's policy tightening path, which will influence the USD and help determine the next leg of a directional move for the non-yielding gold.

Technical levels to watchc