Gold Price Forecast: XAU/USD recovers intraday losses, downside remains favored on hawkish Fed

• Gold price has displayed a rebound after hitting a low of $1,832.41 ahead of US ISM Manufacturing PMI.
• Mounting inflationary pressures are hurting the real income of the households.
• The US ISM Manufacturing PMI is expected to land at 54.5 vs. 55.4 recorded earlier.

Gold price (XAU/USD) has witnessed a rebound after a sheer downside move near a two-week low at $1,832.41. The precious metal has recovered its entire intraday losses and may display a bullish open rejection-reverse trading session after overstepping Wednesday’s high at $1,838.62. However, the fundamentals are still favoring gold bears.

The bright metal delivered a poor performance on Tuesday as investors started discounting an extreme hawkish tone from the Federal Reserve (Fed) in its June interest rate decision announcement. No one could deny the fact that the inflation ghost has created havoc for the households. Rising price pressures are hurting their real income and a sudden meeting between Fed chair Jerome Powell and US President Joe Biden has indicated loud and clear that the inflation ghost is for real and will stay a little longer.

On the dollar front, the US dollar index (DXY) is consolidating below 102.00 as investors are awaiting the release of the ISM Manufacturing PMI. The economic data is seen at 54.5 against the prior print of 55.4. An outperformance from the economic catalyst will bolster the DXY.

Gold technical analysis

The breakdown of the Symmetrical Triangle on an hourly scale indicates the dominance of the bears. The ascending triangle of the above-discussed chart pattern is placed from May 20 low at $1,832.41 while the descending trendline is plotted from May 24 high at $1,869.75. The widening gap between 20- and 50- period Exponential Moving Averages (EMAs) at $1,841.00 and $1846.20 respectively will infuse fresh blood into the greenback bulls. The Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which indicates more downside ahead.

Gold hourly chart