Gold Price Forecast: XAU/USD falls for three straight days, below $1650

• Gold price edges down but above the YTD low in the Asian session, around $1626.40.
• Risk aversion keeps traders’ flows toward the greenback, weighing on the yellow metal.
• Gold Price Analysis: In the near term could test the $1650 mark.

The gold price and the precious metals continue to be battered by dismal market sentiment, with US equities extending their losses and rising US T-bond yields, now with 2s and 5s, above the 4% threshold, while the 10-year gains almost seven bps, a headwind for the non-yielding metal. At the time of writing, XAU/USD is trading at $1640 a troy ounce, below its opening price by 0.09%.

Sentiment remains depressed. Worldwide recession worries, spurred by Fed’s aggressive tightening, alongside stickier than estimated inflation readings, keeps investors assessing if the economy may tap into a recession or not. In the meantime, the greenback remains in the driver’s seat, as the US Dollar Index has shown rising 0.40%, sitting at 113.585.

Meanwhile, the gold price dropped and hit a fresh 2-year low during the Asian session at around $1626.40, but it recovered some ground, falling short of hitting a daily high at $1650. With the lack of US economic data, with just the Chicago National Activity Index for August dropping to the 0 levels, Fed speakers began crossing newswires.

Atlanta’s Fed President Raphael Bostic said that he still believes the Fed can tame inflation without substantial losses in the labor market, given the current economic slowdown. He reassures that inflation s “too high,” adding that the US central bank needs to do all it can to control it.

Of late, the new Boston Fed’s President Sussan Collins said that for the Fed to achieve its inflation target, the unemployment rate needs to get higher without causing a spike in layoffs. She added that she would like “clear and convincing signs” that inflation is falling. She said, “a significant economic or geopolitical event could push our economy into a recession as policy tightens further.”

What to watch

The US economic docket will feature Durable Good Orders, Building Permits, Consumer Confidence and New Home Sales on Tuesday. Also, more Fed speakers would cross wires, led by Regional Fed Presidents Logan, Mester, Evans, Bullard and Daly.

Gold Price Analysis (XAU/USD): Technical outlook

From a daily chart perspective, XAU/USD remains downward biased, even though RSI shifted to oversold conditions. Breaking below the bottom trendline of a descending wedge at $1650 exacerbated the fall towards new YTD lows. In the one-hour scale, XAU/USD made a base nearby the S1 daily pivot at $1630, bouncing toward the current spot price, reclaiming the 20-EMA. Therefore, a re-test of the $1650 is on the cards.