Gold Price Forecast: XAU/USD faces barricades above $1,650 as DXY rebounds, recession fears loom

• Gold price has failed to sustain above $1,650.00 amid a rebound in the DXY.
• The risk-on impulse is intact despite soaring recession fears.
• A fourth consecutive 75 bps rate hike by the Fed seems certain now.

Gold price (XAU/USD) has sensed selling pressure while attempting to sustain above the immediate hurdle of $1,650.00 in the Tokyo session. The pullback move in the precious metal after dropping to near $1,646.83 in the late New York session has terminated as the US dollar index (DXY) has rebounded.

The DXY has picked bids around 112.00 after remaining in the grip of bears. However, the risk-on sentiment is still intact. S&P500 futures are holding the overnight gains followed by a bullish Monday. Also, the 10-year US Treasury yields is oscillating below the critical figure of 4%. Going forward, the yellow metal may resume its downside journey towards $1,640.00 as bets for hawkish Federal Reserve (Fed) monetary policy are solid.

As per the CME FedWatch tool, the chances of an increment in the interest rates by 75 bps consecutively for the fourth time stand at 98.9%.

Meanwhile, recession fears have advanced after negative commentary from J.P. Morgan on financial instruments. Strategists at J.P. Morgan cited that they are cutting back on their delivery longs in equities and trimming their underweight position in bonds due to increased risk that central banks will make a hawkish policy error, reported Reuters.

Gold technical analysis

On an hourly scale, the gold prices have picked significant selling pressure in several attempts of surpassing the highest auction area placed in a range of $1,661.70-1,684.50. The precious metal has sensed barricades around the 20-period Exponential Moving Average (EMA) at $1,654.43.

The Relative Strength Index (RSI) (14) is hovering around 40.00, and a drop below the same will trigger the downside momentum.

Gold hourly chart