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Gold Price Forecast: XAU/USD oscillates below $1,840 as focus shifts to Fed Powell’s testimony

Gold price (XAU/USD) is displaying back and forth moves in a narrow range of $1,835.59-1,839.15 in the early Asian session. The precious metal is going through a corrective action as a gradual decline has been recorded in the gold prices after the asset recorded a high of $1,857.64 on Thursday.

The gold prices are facing the headwinds of an extremely tight policy period. Investors have still not passed the hangover of the 75 basis points (bps) interest rate hike announcement last week. Now, advancing odds of a consecutive 75 bps rate hike are hurting the greenback bulls.

The US dollar index (DXY) has turned sideways below 104.50 as investors are awaiting the Federal Reserve (Fed) chair Jerome Powell’s testimony, which is due on Wednesday. Apart from that lower forecasts for the US Purchase Managers Index (PMI) will keep hammering the DXY.

The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. The estimates for the Manufacturing and Services indicate an underperformance. The Services PMI is seen extremely lower at 49.1 against the prior print of 53.2. While the Manufacturing PMI is expected to slip to 54.7 from the former figure of 55.7.

Gold technical analysis
On an intraday scale, the gold prices are auctioning in a Descending Triangle pattern. The horizontal support of the chart pattern is placed from $1,836.04 while the downward sloping trendline is plotted from Monday’s high at $1,845.54. The primary trendline placed from last week’s high at $1,857.58. The asset is trading near the 50-period Exponential Moving Average (EMA) at $1,839.14, which signals a consolidation ahead. While, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which signals a continuation of a sideways move.

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