Gold Price Forecast: XAU/USD struggles around $1,800, with key focus on Fed Minutes

• Gold Price remains wary, with September Fed rate hike bets in play.
• Treasury yields pullback in Asia while the USD clings to Friday’s gains.
• XAU/USD yielded a weekly close above key 50 DMA, Fed Minutes in focus.

Gold Price is struggling to find demand at the start of the week near the $1,800 mark, as bulls give into the bearish pressures amid a cautious risk sentiment.

Amidst intensifying US-Sino tensions, a five-member congressional delegation arrived in Taiwan on Sunday, less than two weeks after the contentious visit by House Speaker Nancy Pelosi, sapping investors’ confidence. Markets believe that the delegation’s presence in Taipei will provoke a sharp reaction from Beijing, possibly more military exercises.

Also read: Gold, Chart of the Week: XAU bears eye a break below $1,783

Further, investors turn cautious ahead of Wednesday’s Fed July meeting’s minutes, which may reveal fresh insights over a likely debate amongst the policymakers regarding the size of the next rate hike. Markets are currently pricing a 55% probability of the Fed going in for a 50 bps rate increase next month. Softer US inflation last week poured cold water on supersized Fed rate hikes in the coming months.

Uncertainty around Fed’s next policy move combined with the US-China conflict underpin the US dollar’s safe-haven appeal, weighing down on the USD-priced gold. The greenback preserves a major part of Friday’s upsurge, triggered by a strong jump in the Michigan Consumer Sentiment Index. The preliminary August estimate of the UoM consumer sentiment index rose to three-month highs of 3.6 points to 55.1 from a July reading of 51.5.

The downside in the bright metal, however, appears capped, for now, courtesy of the pullback in the Treasury yields across the curve after Friday’s steep rebound. The benchmark 10-year Treasury yields retreated after having run into stiff resistance just below the 3.0% key level.

Attention now turns towards the FOMC minutes due this Wednesday for investors’ re-pricing of the Fed tightening outlook Ahead of that the Chinese activity data and US industrial figures will set the tone for markets.

Gold Price: Daily chart

Technically, “$1,800 capped this week's advance and buyers are likely to refrain from betting on further gold strength unless this resistance fails. Above that level, $1,830 (Fibonacci 38.2% retracement of the latest uptrend) aligns as the next bullish target ahead of $1,840, where the 100-day and the 200-day SMAs are located,” FXStreet Analyst Eren Sengezer explained.

Eren added,” on the downside, significant support seems to have formed at $1,780 (50-day SMA, Fibonacci 23.6% retracement) ahead of $1,750 (20-day SMA).”

Gold Price: Additional levels to consider