Gold Price Forecast: XAU/USD aims to recapture weekly lows ahead of Fed Powell and US PCE

• Gold price is eyeing downside to near weekly lows at $1,816.98.
• The DXY has advanced firmly on expectations of hawkish Fed Powell and stable PCE.
• The precious metal is displaying signs of volatility contraction amid Descending Triangle formation.

Gold price (XAU/USD) is auctioning around a two-day low at $1,818.64 and is expected to slip further to near the weekly low at $1,816.98. The precious metal has failed to capitalize on the event of banning the imports of gold from Russia, which generates the second-highest revenue for Moscow after oil and gas. The gold prices have remained vulnerable for the past few trading weeks i.e. declining gradually and are expected to slip swiftly now.

Meanwhile, the US dollar index (DXY) is attempting to surpass 104.50. The asset has scaled firmly above the critical hurdle of 104.00 as investors are bracing for a hawkish commentary from Federal Reserve (Fed) chair Jerome Powell. The speech from Fed Powell will provide hints about the likely monetary policy action in July. For sure, a rate hike will be announced in July monetary policy meeting but what needs to gauge is the extent of a rate hike.

Apart from that, the release of the quarterly US Personal Consumption Expenditure (PCE) will remain in focus. As per the market consensus, the PCE is seen stabled at 7%.

Gold technical analysis

The gold prices are trading in a Descending Triangle pattern that signals a volatility contraction. The downward sloping trendline is plotted from June 16 high at $1,857.58 while the horizontal support is placed from June 16 low at $1,815.73. The precious metal is balanced below the 200-period Exponential Moving Average (EMA) at $1,831.25. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which adds to the downside filters.

Gold hourly chart