Gold Price Forecast: XAU/USD tumbles below $1,800 as hawkish Fed guidance underpins US Dollar

• Gold price has witnessed a vertical fall to near $1,790.00 amid a significant recovery in the US Dollar.
• The Fed sees interest rate peak at 5.1% after hiking interest rates by 50 basis points (bps) to 4.25-4.50%.
• As per the consensus, the monthly US Retail Sales (Nov) are expected to contract by 0.1%.

Gold price (XAU/USD) has witnessed a steep fall and has dropped below the psychological support of $1,800.00 in the Asian session. The precious metal has surrendered Federal Reserve (Fed) policy-inspired wild movement low at $1,795.50 and is expected to remain on tenterhooks.

Meanwhile, investors have underpinned the risk-aversion theme as higher interest rate peak guidance by the Fed has escalated recession fears. Fed chair Jerome Powell sees interest rate peak at 5.1% after hiking interest rates by 50 basis points (bps) to 4.25-4.50%. The US Dollar Index (DXY) has advanced to near 103.90 and is expected to recapture the 104.00 resistance ahead.

S&P500 futures have surrendered their entire gains recorded in early Tokyo as Fed chair Jerome Powell has yet not confirmed an inflation peak. Going forward, investors will focus on the release of the United Stated Retail Sales data, which is scheduled for Thursday. November’s Retail Sales are expected to contract by 0.1% vs. an expansion of 1.3% reported earlier. A decline in Retail Sales might support Gold price ahead.

Gold technical analysis

Gold price is declining toward the lower edge of the Rising Wedge chart pattern formed on a four-hour scale. The above-mentioned chart pattern indicates volatility contraction at the end of the tunnel. The precious metal has dropped to near the 50-period Exponential Moving Average (EMA) at $1.790.00 while the 200-EMA at $1,754.34 is still advancing, which indicates that the long-term trend is still intact.

Meanwhile, the Relative Strength Index (RSI) (14) is failing to shift into the bullish range of 60.00-80.00, which indicates that the upside bias has faded.

Gold four-hour chart