Gold Price Forecast: XAUUSD auctions above $1,930, eyes a test of $1,900 on likely hawkish Fed

• XAU/USD is bidding around 61.8% Fibo retracement on a likely hawkish Fed move in May.
• An interest rate hike of 50 bps is going to feature in May as dictated by the Fed policymakers.
• Investors should brace for a quicker reversion to neutral rates to corner the inflation.

Gold (XAU/USD) is displaying a mild positive move in the early Tokyo session after a bearish Friday as the market is attracting volatility in a likely prolonged hawkish environment. The precious metal is drifting lower after failing to reclaim the psychological resistance of $2,000.00 last week as the market participants are bracing faster-than-expected pace to be adopted by the Federal Reserve (Fed) to reverse back to the neutral rates.

Fed chair Jerome Powell in his testimony at the International Monetary Fund (IMF) meeting on Thursday mentioned a 50 basis point (bps) interest rate hike on the cards. This has bolstered the possibility of an event of a jumbo rate hike announcement by the Fed in May monetary policy. Also, Fed’s Powell reported that multi-decade high inflation in the US economy is demanding a quick pace for interest rate elevation, which states that investors should brace for more than one 50 bps rate hike announcement by the Fed this year. Also, the risk-aversion theme in the market is underpinning the greenback against the precious metal.

Gold Technical Analysis

On an hourly scale, XAU/USD is oscillating around 61.8% Fibonacci retracement (placed from March 29 low at $1,890.21 to last week’s high at $1,998.43) at $1,931.56. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,938.20 and $1,944.56 respectively are scaling lower, which adds to the downside filters. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which signals a fresh bearish impulsive wave ahead.

Gold hourly chart