Gold Price Forecast: XAU/USD looks set for further downside to near $1,820 on aggressive Fed bets

• Gold price is eyeing more downside to near $1,820.00 amid hawkish FOMC minutes.
• FOMC minutes state China’s reopening and the Russia-Ukraine war still hold the risk of further escalation in inflation.
• Gold price is auctioning in an Inverted Flag, which is a bearish trend continuation pattern.

Gold price (XAU/USD) is displaying a sideways auction around $1,825.00 in the Asian session. The precious metal has turned sideways after a vertical sell-off and is expected to continue its downside to $1,820.00 as the Federal Open Market Committee (FOMC) minutes are conveying more rates to tame stubborn inflation.

The US Dollar Index (DXY) is aiming to recapture the weekly resistance of 104.33 as further policy restrictions to bring down inflation cannot be ruled out. S&P500 futures are demonstrating some gains in the Tokyo session after a choppy Wednesday, portraying a minor recovery in the risk appetite of the market participants. The return delivered on the 10-year US Treasury yields is marginally dropped to near 3.92%.

The minutes of the Federal Reserve (Fed)’s February monetary policy meeting explain inflation to be persistent as the reopening of China’s economy and the Russia-Ukraine war still hold the risk of further escalation in the price index. Meanwhile, St. Louis Fed President James Bullard has supported an aggressive monetary policy ahead. Fed policymaker sees the terminal rate at around 5.4%.

For further guidance, United States Gross Domestic Product (GDP) (Q4) data will remain in the spotlight. The annualized GDP data is seen unchanged at 2.9%. Economic activities in the US have remained contracting in the past few months. Therefore, the US GDP could deliver a downside surprise.

Gold technical analysis

Gold price is forming an Inverted Flag chart pattern, which is a bearish trend-following pattern. The pattern formation is near the horizontal support plotted from December 13 high at $1,824.55 on a four-hour scale. The chart pattern indicates a sheer consolidation that is followed by a breakdown. Usually, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants initiate shorts, which prefer to enter an auction after the establishment of a bearish bias.

The 50-period Exponential Moving Average (EMA) at $1,844.00 is acting as a major barricade for the Gold bulls.

Also, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates more weakness ahead.

Gold four-hour chart