Gold Price Forecast: XAU/USD aims to recapture $1,830 as Fed to declare higher interest rate peak
- Gold price is looking to recapture the crucial resistance of $1,830.00 ahead.
- Fed’s higher interest rate peak might put the US Dollar Index back in action.
- Gold price is auctioning in an Ascending Triangle that indicates a volatility contraction.
Gold price (XAU/USD) settled around $1,823.00 on Friday after failing to surpass the same resistance despite a sell-off in the US Dollar Index (DXY). The precious metal delivered a gradual upside move from the psychological support of $1,800.00 after sheer pain in the USD Index.
The USD Index delivered a breakdown of the two-week consolidation formed in a narrow range of 103.47-104.57 as investors shrugged off uncertainty over China’s Covid-19 situation. A sheer pace in the reopening phase of the Chinese economy has spiked the number of infections, which has triggered short-term pain in economic prospects. However, the economic projections have started attracting optimism from the think tanks in the market.
Meanwhile, the Gold price could face immense pressure if rumors of higher interest rate peak by the Federal Reserve (Fed) get more air. A note from TD Securities claims that “Note that the Committee signaled expectations of a substantially higher terminal rate for 2023 despite implementing a downshift in the pace of rate increases to 50 basis points (bps) at the December meeting. We are of the view that the terminal rate will reach a range of 5.25-5.50% by the May Federal Open Market Committee (FOMC) meeting.”
Gold technical analysis
Gold price is auctioning in an Ascending Triangle chart pattern on a four-hour scale. The horizontal resistance of the aforementioned chart pattern is placed from December 13 high at $1,824.55 while the upward-sloping trendline is plotted from December 16 low at $1,774.36.
Advancing 20-and 50-period Exponential Moving Averages (EMAs) at $1,814.77 and $1,807.43 respectively add to the upside filters.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00 from the 40.00-60.00 range, which indicates more upside ahead.