Gold Price Forecast: XAU/USD remains bearish below $1,750, at 1-week lows

• The gold price continues to lose ground for the fourth day in a row and falls to a week low.
• The strong tracking of US dollar buying is seen as a key factor putting pressure on the commodity.
• Market caution could offer some support to the safe haven XAU/USD and limit losses.

the price of gold extends last week’s pullback from a three-month high and remains under some selling pressure for a fourth straight day on Monday. The constant descent drags the XAU/USD to a minimum of one and a half weeks, around the area of ​​$1,737, during the middle of the European session, and is sponsored by the strong monitoring of dollar purchases.

The worsening COVID-19 situation is leading to the imposition of new lockdowns in several financial centers – including the capital, Beijing, and the economic hub, Shanghai – and is fueling concerns of a deeper economic recession. This, in turn, boosts the dollar’s status as the world’s reserve currency and is seen as a key factor weighing on the price of dollar-denominated gold.

The USD is buoyed by recent hawkish signals from the Fed, which suggest that the US central bank may still be some way from stopping its tightening cycle. In addition, the better-than-expected US Retail Sales figures released last week cast doubt on the inflation-peak narrative and support the prospects for further Fed rate hikes.

In fact, current market prices indicate a higher probability of a 50 basis point hike at the next FOMC policy meeting in December. This helps to move the flows away from the price of Gold, which does not offer returns. That being said, cautious markets could prevent bears from making aggressive bets around the safe haven of XAU/USD and limit losses, at least for now.

In the absence of any major economic releases, the mixed fundamental background warrants some caution before positioning for a further intraday depreciation move. Market participants may also prefer to wait for a new catalyst from Wednesday’s FOMC Meeting Minutes and other key US macroeconomic data to determine the near-term path of the gold price.

Technical levels to watch