Gold Price Forecast: XAU/USD justifies falling wedge breakout near $1,780, Fed Minutes eyed

Gold price remains firmer after confirming a bullish chart pattern.
Softer US dollar, yields also underpin XAU/USD rebound from a one-week low.
US Retail Sales, headlines concerning China will also be important for fresh impulse.

Gold price consolidates weekly losses around $1,778 amid broad US dollar weakness heading into Wednesday’s European session. In doing so, the XAU/USD traders also portray the cautious mood of the Federal Open Market Committee (FOMC) meeting minutes.

That said, the US Dollar Index (DXY) refreshed its three-week high before reversing from 106.94, down 0.10% near the intraday low of 106.35 at the latest. The DXY losses could be linked to the market’s preparations for today’s US Retail Sales for July, expected 0.1% versus 1.0% prior, as well as the Fed minutes. It’s worth noting that the recent weakness in the US data challenges the hawkish hopes from the Fed, which in turn exert downside pressure on the US dollar and favor gold buyers.

Elsewhere, China’s Premier Li Keqiang recently crossed wires, via the Communist Party’s flagship newspaper People’s Daily, while urging local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures. On Wednesday, President Xi Jinping and state planner National Development and Reform Commission (NDRC) showed readiness for more measures to combat the recession fears.

Given the dragon nation’s status of being the world’s biggest commodity user, any negatives for Beijing weigh on the gold prices. However, the latest rebound in XAU/USD could well be linked to the thinking that the hopes of more stimulus could push for more metal demand from China.

While portraying the sentiment, US 10-year Treasury yields fade the previous day’s rebound while S&P 500 Futures retreat from a four-month high.

Looking forward, US data and Fed Minutes could direct XAU/USD moves while the headlines concerning China and the recession will also be important for clear directions.

Technical analysis

A clear upside break of the weekly resistance line confirms the short-term falling wedge bullish chart pattern, which in turn directs gold price towards Friday’s peak of $1,805.

However, the 200-HMA hurdle near $1,787 could challenge the XAU/USD bulls. Also acting as an upward resistance is the monthly peak surrounding $1,808.

Alternatively, the resistance-turned-support near $1,777 precedes the stated wedge’s support, close to $1,770 by the press time, to restrict the short-term XAU/USD downside.

Following that, the $1,765 and the monthly low of $1,754 will gain the gold sellers’ attention.