Gold Price Forecast: XAU/USD renews yearly low on the way to $1,750, Fed Minutes eyed

• Gold Price remains pressured around seven-month low on recession fears.
• Hawkish Fed bets, China-linked concerns exert additional downside pressure on XAU/USD.
• FOMC Minutes, US ISM Services PMI for June may entertain traders but economic fears keep sellers hopeful.

Gold Price (XAU/USD) takes offers to renew the yearly low around $1,763 heading into Wednesday’s European session.

The metal slumped the most in three weeks the previous day while visiting the lowest levels since December 2021. However, bears took a breather around multi-day bottom during the sluggish Asian session before extending the south-run of late.

XAU/USD’s latest weakness could be linked to the headlines suggesting further hawkish moves from the Bank of England (BOE) and the European Central Bank (ECB), not to forget China’s readiness to strengthen strategic coordination with Russia. On the same line could be the market’s cautious mood ahead of the Federal Open Market Committee (FOMC) Minutes and the US ISM Services PMI for June, expected 54.5 versus 55.9 prior.

Previously, pessimism surrounding the global supply chain amid the escalation in the Russia-Ukraine tussles joins fears of fresh covid-led lockdowns in China to amplify recession risks, which in turn weigh on the gold prices. The macro pessimism intensified on Tuesday after Germany and Italy flashed economic warnings while the Bank of England (BOE) also released a report conveying the grim economic outlook.

It should be noted that the recently firmer US Factory Orders for May, to 1.6% MoM versus 0.5% expected and upwardly revised 0.7% previous readings, also exert downside pressure on the Gold Price, via increasing hawkish bets on the Fed’s next moves.

With this, the US Dollar Index (DXY) remains firmer around the highest levels since 2002 while yields fade initial rebound and the stock futures remain pressured of late.

To sum up, Gold Price bears the burden of economic pessimism and the firmer US dollar heading into the week’s key data/events.

Technical analysis

Gold’s corrective pullback fades below the previous key support around $1,780-85, which in turn joins a bearish MACD signal to hint at the metal’s further downside towards the late 2020 lows near $1,753.

However, oversold RSI (14) and traders’ anxiety ahead of the key US data/events might test the XAU/USD bears afterward, if not then the downward trajectory could aim for lows marked in September and August 2021, respectively near $1,721 and $1,677.

Meanwhile, recovery moves past beyond the support-turned-resistance area surrounding $1,785 needs validation from a two-month-old hurdle close to $1,810 and a downward sloping resistance line from April 18, near $1,818 by the press time.

Should gold prices remain firmer past $1,818, the odds of witnessing a run-up towards the 61.8% Fibonacci retracement of December 2021 to March 2022 upside, near $1,875, can’t be ruled out.

Gold: Daily chart

Trend: Bearish