Gold Price Forecast: XAU/USD eases back to $1,850 on anxious markets, PMIs, Fed’s Powell in focus

• Gold renews intrdaay low while reversing from fortnight top, probes four-day uptrend.
• Week-start optimism fades on hawkish Fedspeak, USTR Tai’s comments.
• Cautious mood ahead of preliminary PMIs for May, speech from Powell also probe bulls.
• Quad Summit, China’s covid conditions are extra catalysts to keep eyes on for fresh impulse.

Gold (XAU/USD) struggles for clear directions as it retreats from a two-week high during a lackluster Asian session on Tuesday. That said, the precious metal’s inaction around $1,850, close to the daily low near $1,850 by the press time, can be linked with the recently sour sentiment and the market’s anxiety ahead of the key data/events.

While portraying the mood, S&P 500 Futures drop 0.70% intraday and the US 10-year Treasury yields fall 1.8 basis points (bps) to 2.84%, as recently hawkish Fedspeak joins fresh fears concerning the US-China trade war.

Comments from San Francisco Federal Reserve Bank President Mary Daly and Kansas City Federal Reserve Bank President Esther George seem to have triggered the latest risk-off mood. “I think that we can weather this storm, get the interest rate up...price stability restored and still leave Americans with jobs a plentiful and with growth expanding as we expect it to," said Fed’s Daly during an interview with Fox News on Monday. On the same line, Fed’s George expects the US central bank to lift its target interest rate to about 2% by August.

Elsewhere, US Trade Representative (USTR) Katherine Tai poured cold water on the face of expectations that the Sino-American jitters will be eased soon, at least for the trade concerns. The US diplomat said, “We're still working on next actions with China,” while turning down the optimism triggered by US President Joe Biden’s comments suggesting a reversal of the Trump-era tariffs on China.

It’s worth observing that the cautious mood ahead of the Quad Summit in Tokyo and the preliminary readings of the US S&P Global Manufacturing and Services PMIs for May, as well as a speech from Fed Chairman Jerome Powell, also weigh on the gold price.

Looking forward, gold buyers will wait for upbeat US data and confirmation of a 50 bps rate hike from Fed’s Powell for return. In the absence of this, the metal prices become vulnerable to reverse the latest corrective pullback from a four-month low.

Also read: Gold Price Forecast: Loses steam amid a better market mood

Technical analysis

Despite the latest inaction, gold price seesaws inside a weekly rising channel while keeping the previous week’s upside break of the 200-HMA, portraying the traders’ bullish bias.

That said, the stated channel’s upper line and a downward sloping resistance line from April 29, respectively near $1,870 and $1,878, restrict short-term upside moves of gold prices.

Alternatively, a convergence of the 200-HMA and support line of the aforementioned bullish channel, close to $1,833-30, appears a tough nut to crack for sellers.

Overall, gold’s gradual recovery remains intact even as the buyers await fresh catalysts.

Gold: Hourly chart

Trend: Further upside expected