Gold Price Forecast: XAU/USD Struggles Near Multi-Month Lows, Looks Vulnerable Further Down

• Gold price fails to sustain its early gains and remains near multi-month lows.
• Hardline central banks continue to act as a headwind for the outperforming yellow metal.
• The Dollar is holding firm near two-week highs and contributing to the intraday slide in XAU/USD.

The price of Gold (XAU/USD) it fails to capitalize on the modest gains posted during the Asian session and falls for the fourth day in a row on Thursday. XAU/USD is currently trading around $1,905, just above its lowest level since mid-March touched earlier in the day, and it looks vulnerable going lower.

Hardline central banks continue to weigh on the gold price.

The hawkish outlook from major central banks and the prospects for further rate hikes interest rates continue to weigh on the price of gold, which does not offer yields. In fact, the president of the European Central Bank (ECB), christine lagarde, declared on Wednesday that inflation in the eurozone had entered a new phase that could continue for some time. Lagarde further noted that it is unlikely that in the near future the central bank will be able to say with full confidence that the maximum rates have been reached. On the other hand, the Governor of the Bank of England (ECB), Andrew Baileyspeaking at the ECB conference, hinted that rates could remain at peak levels for longer than investors currently expect.

Modest dollar strength continues to weigh on XAU/USD

In addition, the president of the Federal Reserve (Fed), Jerome Powell, reiterated that two rate hikes are likely this year and did not rule out the possibility of a move at the next monetary policy meeting on July 25-26. Powell also said he doesn’t see inflation coming down from the Fed’s 2% target until 2025. This, in turn, helps the US dollar (USD) stay near two-week highs, which is seen as another factor putting pressure on the gold price. That said, concerns about economic difficulties stemming from rapidly rising borrowing costs could curb aggressively bearish expectations around the safe-haven precious metal and help limit losses by less for now.

Focus Remains on Friday’s US PCE Price Index

Market participants await the US economic agenda, in which the final data for the First Quarter GDP, Usual Initial Weekly Jobless Claims, and Pending Home Sales, will be published first thing in the American session. These data could boost demand for the dollar and give the gold price some momentum. However, attention remains focused on the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday. This data will influence the path of the Fed’s rate hikes and give a new directional boost to XAU/USD.

Gold Price Technical Outlook

From a technical point of view, the continuation of sales and acceptance below the level of $1,900 will be considered a new trigger for bears. Given that the oscillators on the daily chart remain in negative territory and are still far from the oversold zone, the price of gold could accelerate the fall towards the zone of $1,876-$1,875. The bearish trajectory could extend further to challenge the important 200 day SMA, currently around the red zone. $1,840.

On the other hand, any positive movement that exceeds the zone of $1,912-$1,913the high of the Asian session, could face resistance near the zone of $1,924-$1,925ahead of the zone of $1,936. It is closely followed by the 100-day SMA, currently hovering around the $1,942. If the XAU/USD rises above that level a short-covering rally could occur towards the area of $1,962-$1,964on the way to the resistance zone of $1,970-$1,972. Continuation purchases should allow gold to recover the psychological level of the $2,000 and continue climbing towards the barrier of the $2,010.

Gold additional technical levels