Gold Price Forecast: XAUUSD struggles near $1,800 mark as USD rallies back to 20-year peak

• Gold Price edged lower for the second straight day and was pressured by a combination of factors.
• Aggressive Fed rate hike bets continued acting as a headwind amid signs of stability in the markets.  
• Modest USD strength further weighed on the XAUUSD, though recession fears helped limit losses.

Gold Price edged lower for the second successive day on Tuesday and dropped back closer to the $1,800 mark through the early European session.

The Federal Reserve’s non-stop chatter about rate hikes to curb soaring inflation turned out to be a key factor that continued acting as a headwind for the non-yielding gold. In fact, Fed Chair Jerome Powell said last week that the US central bank remains focused on getting inflation under control and added that the US economy is well-positioned to handle tighter policy. Apart from this, signs of stability in the financial markets further weighed on the traditional safe-haven XAUUSD.

Reports that US president Joe Biden was leaning toward a decision on easing tariffs on goods from China offered a brief respite to nervous investors. That said, growing worries about a global recession should keep a lid on any optimistic move. Meanwhile, the risk-on flow pushed the US Treasury bond yields higher. This, along with hawkish Fed expectations, lifted the US dollar back closer to a two-decade high and exerted additional downward pressure on the dollar-denominated gold.

Despite the combination of negative factors, bearish traders seem reluctant to place aggressive bets and might prefer to wait for this week's key releases. The minutes of the latest FOMC monetary policy meeting are due on Wednesday and would be looked upon for fresh clues about the policy tightening path. Market participants will further take cues from Friday's release of the closely-watched US monthly jobs report (NFP). This will play a key role in influencing the near-term USD price dynamics and help investors to determine the next leg of a directional move for gold price.

Technical levels to watch