Gold Price Forecast: XAU/USD oscillates below $1,720 as investors await Fed Powell’s speech

• Gold price has turned sideways around $1,716.00 as focus shifts to Fed Powell’s speech.
• Fed Powell may sound hawkish on interest rate guidance amid soaring price pressures.
• The DXY witnessed an intense sell-off on softening retail demand.

Gold price (XAU/USD) is displaying a time-based correction after sensing exhaustion at around $1,720.00 in the Asian session. Earlier, the precious metal witnessed a decent rally after sustaining above the psychological support of $1,700.00. The market participants poured liquidity into the yellow metal after the minutes from Federal Reserve (Fed)’s Beige Book indicated moderation in the inflation rate in a few districts.

A major highlight which forced the market participants to trim positions in the US dollar index (DXY) was softening demand. As escalating price pressures have forced households to make higher payouts keeping the quantity unchanged, households have postponed demand for durables but are sticking to unchanged necessity goods quantities. US Manufacturing activities have remained subpar in the past few months and a similar trend is expected further amid softening demand.

Meanwhile, the US dollar index (DXY) has attempted a rebound after hitting a low below 109.60. The DXY is expected to remain volatile as investors are awaiting the speech from Fed chair Jerome Powell. A hawkish stance is expected on interest rate guidance as the interest rate has widely deviated from the desired rate of 2%.

Gold technical analysis

Gold prices have rebounded firmly after successfully testing the previous lows near $1,690.00 with lower selling pressure. A Double Bottom formation is followed by a strong rally, which indicates a bullish reversal, and more gains are expected ahead.

The 20-and 50-period Exponential Moving Averages (EMAs) have delivered a bullish crossover at $1,707.00, which indicates more upside ahead. Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which signals a continuation of upside momentum.

Gold hourly chart