Gold Price Forecast: XAU/USD pauses above $1,800, downside looks likely ahead of Fed

• Gold price is displaying a minor pause above $1,800.00 after a steep rally.
• A 75 bps rate hike by the Fed will have a significant impact on the inflationary pressures.
• The precious metal is declining towards $1,786.00 as the RSI (14) has shifted into a bearish range.

Gold price (XAU/USD) is displaying a minor pause above the psychological support of $1,800.00 after a perpendicular fall. The market participants have dumped the precious metal on expectations of an interest rate hike above 50 basis points (bps) figure this time.

The gold prices faced extreme selling pressure after a pullback move towards $1,830.00 on Tuesday, which dragged the bright metal sharply to near $1,800.00. The annual US inflation figure has risen to 8.6% on annual basis.  It looks like the quantitative tightening yet done by the Federal Reserve (Fed) has failed to impact materially on the price pressures.

Meanwhile, the US dollar index (DXY) is oscillating around 105.50 and is expected to display more upside on expectations of an extreme hawkish tone by Fed chair Jerome Powell. The DXY is advancing firmly on a broader basis and has refreshed its 19-year high at 105.65. Also, the 10-year US Treasury yields have jumped to 3.8% as a big rate hike by the Fed is on the cards.

Gold technical analysis

On a four-hour scale, the gold prices are declining towards the potential support that is placed at $1,786.94. The 50- and 200-period Exponential Moving Averages (EMAs) at $1,842.80 and $1,859.90 respectively have turned lower again after remaining sideways, which signals an initiative selling structure. The Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which signals more pain ahead.

Gold four-hour chart