• Gold price struggles to capitalize on its modest intraday uptick and hangs near a one-month low.
  • Expectations that the Federal Reserve will stick to its hawkish stance seem to cap the XAU/USD.
  • Subdued US Dollar price action lends some support ahead of Fed Chair Jerome Powell’s speech.

Gold price edges higher for the second straight day on Tuesday, albeit seems to struggle to capitalize on the modest intraday gains. The XAU/USD trades around the $1,872-$1,873 region heading into the North American session and remains close to a one-month low touched on Monday.

Subdued US Dollar demand lends support to Gold price

The US Dollar (USD) stalls its recent strong recovery move from a nine-month low and turns out to be a key factor lending some support to the Gold price. The downside for the USD, however, seems cushioned amid expectations that the Federal Reserve (Fed) will stick to its hawkish stance for longer. This, in turn, keeps a lid on any meaningful upside for the US Dollar-denominated commodity.

Hawkish Fed expectations cap the upside for Gold price

The latest monthly employment details from the United States (US) released last Friday pointed to the underlying strength in the labor market and could allow the Fed to continue raising interest rates. This, in turn, pushes the US Treasury bond yields higher and acts as a tailwind for the Greenback, capping gains for the non-yielding Gold price, at least for the time being.

Focus remains on Fed Chair Powell’s speech

Traders also seem reluctant to place aggressive bets ahead of Fed Chair Jerome Powell’s appearance later during the US session. Powell’s comments on inflation and monetary policy might influence market expectations about the Fed’s rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to Gold price.

In the meantime, the XAU/USD seems more likely to extend its sideways consolidative price move in the absence of any relevant market-moving economic releases from the US. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent sharp pullback from the highest level since April 2022 has run its course and positioning for additional gains.

Gold price technical outlook

From a technical perspective, the lack of any meaningful buying suggests that the recent downfall in Gold price might still be far from being over. Moreover, oscillators on the daily chart have just started drifting into negative territory and are still far from being in the oversold zone. This, in turn, supports prospects for a further near-term depreciating move. That said, it will be prudent to wait for some follow-through selling below the multi-week low, around the $1,860 region, before placing fresh bearish bets.

Gold price could then accelerate the fall towards the $1,825 horizontal support en route to the $1,800 round-figure mark. This is followed by the very important 200-day Simple Moving Average (SMA), currently around the $1,776-$1,775 area. The latter should act as a pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders set the stage for a deeper corrective decline.

On the flip side, any meaningful upside is likely to confront some resistance near the $1,890-$1.892 zone ahead of the $1,900 mark. A sustained strength beyond has the potential to lift the Gold price to the $1,920 horizontal barrier, above which a bout of a short-covering move could push the XAU/USD towards the $1,950 region. This is closely followed by the multi-month peak, around the $1,960 area touched last week.

Key levels to watch