Gold Price Forecast: XAU/USD Outlook Ahead of Powell Testimony

Summary:
• Gold price is in a tight range as investors focus about the latest interest rate decision by the Federal Reserve.

Gold price is in a tight range as investors focus about the latest interest rate decision by the Federal Reserve. The XAU/USD price is trading at 1,842, which is slightly above last week’s low of 1,834. This price is about 2.13% above the lowest level last week. It remains about 12% below the highest level this year.

Is gold still an inflation hedge?

Gold price has been in a tight range in the past few weeks as investors reflect on gold’s role as an inflation hedge. Data published last week showed that US inflation was still red hot as the cost of doing business surged. The headline consumer inflation data surged to 8.6%, the highest it has been in more than four decades. Excluding the volatile food and energy prices, inflation declined on a MoM basis.

Gold has come under pressure as worries emerge about its role as an inflation hedge. While inflation has surged recently, XAU/USD pair has been under pressure as the US dollar index has surged. The CBOE VIX index has also been in a strong bullish trend in the past few weeks as investors are worried about a potential recession.

Gold will be in focus this week as the US publishes key economic data. For example, the US will publish the latest new home sales data and testimonies by Jerome Powell. He will talk about last week’s decision and what the bank will do next. 

Notably, gold has held quite well compared to Bitcoin, which plummeted below $20,000 during the weekend. Bitcoin is trading at $19,909 while the total market cap of all coins has crashed to about $876 billion.

Gold price prediction

The three-hour chart shows that gold price has been in a steady uptrend in the past week as worries about inflation remain. It rose from a low of $1,804 on June 14th to today’s $1,844. Along the way, the pair is slightly abov the 25-period and 50-period moving averages while the MACD seems to be making a bearish crossover.

Therefore, for now, the outlook for the XAU/USD price is a bit bullish, with the next key resistance level being at 1,856, which was the highest point on June 17th. A drop below 1,835 will invalidate the bullish outlook.