Gold Price (XAU/USD) remains sidelined around 36,172 South African Rand ($1,900), struggling to extend the previous day’s recovery after declining in the last three consecutive weeks while also posting the first quarterly loss in three. That said, the yellow metal’s latest recovery could be linked to the softer US inflation clues and downbeat spending, as well as the broadly risk-on mood. However, the anxiety ahead of this week’s Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes and the US Nonfarm Payrolls (NFP) limit the XAU/USD moves of late.

Gold Price grinds higher as mixed US data test hawkish Federal Reserve concerns

Gold Price rose the most in a fortnight on Friday after the United States inflation clues and spending figures failed to back the hawkish Federal Reserve (Fed) concerns. Even so, the upbeat United States growth figures versus the mixed European number defend the US Dollar bulls and weigh on the XAU/USD ahead of the key week.

In the last week, the US Gross Domestic Product (GDP) Annualized, mostly known as the Real GDP, grew at the 2.0% rate for the first quarter (Q1) of 2023 versus 1.3% initial estimation. Further, the Fed’s preferred inflation gauge, namely the US Personal Consumption Expenditure (PCE) Price Index, for May, came in at 0.3% MoM and 4.6% YoY versus market expectations of reprinting the 0.4% and 4.7% figures for monthly and yearly prior readings.

It should be noted that the US Durable Goods Orders for May improved and the Consumer Confidence for June also rallied, which in turn backs the hawkish Fed talks.

However, the Personal Consumption Expenditure (PCE) Price for Q1 2023 eased to 4.1% QoQ from 4.2% expected and prior, whereas the Pending Home Sales slumped to -2.7% MoM for May compared to 0.2% expected and -0.4% prior (revised).

It’s worth noting that the US Core PCE Price Index marked the weakest increase in six months, which in turn joined the downbeat consumption and expenditure figures to challenge the hawkish Fed concerns and propel the Gold Price.

However, Federal Reserve (Fed) Chairman Jerome Powell joined a slew of Fed officials to back the hopes of further rate hikes from the US central bank and defended the US Dollar, as well as weighed on the Gold Price. Among the important comments, Fed Chair Powell’s statement like, “A strong majority of Fed policymakers expect two or more rate hikes by year-end,” gained major attention.

Apart from the US data and Fed talks, downbeat European economics also help the Gold sellers to remain hopeful as the same fail to underpin the hawkish bias at the European Central Bank (ECB).

During the last week, the preliminary readings of Germany’s inflation per the Consumer Price Index (CPI) rose to 121.00% YoY in June from 114.88% in May and 119.93% expected. On the same line, the European Central Bank’s (ECB) favorite inflation gauge, namely the Harmonized Index of Consumer Prices (HICP), also jumped to 128.27% on a yearly basis from 120.60% prior and 125.75% market forecasts. However, the preliminary Eurozone HICP rose to 2.54% MoM versus 0.00% expected and prior while the yearly figures eased to 93.19% from 94.07% market forecasts and 105.29% previous readings. Further, the Core HICP also softened to 1.60% MoM and 89.52% YoY from 1.24% and 91.51% expected, respectively, versus 0.42% and 87.70% prior in that order. Even so, the ECB Officials keep suggesting higher rates in the annual ECB forum.

Elsewhere, indecision about China’s economic recovery and the US-China tension also exert downside pressure on the XAU/USD price, due to Beijing’s status as one of the biggest Gold consumers. In the last week, the People’s Bank of China (PBoC) conducted heavy Yuan-linked market moves to defend the domestic currency versus the US Dollar, which in turn flags concerns that the dragon nation will do whatever it takes to defend its economy.

Amid these plays, equities marked upbeat performance but yields remained sidelined while the US Dollar Index (DXY) pared weekend gains.

Looking forward, this week’s Fed Minutes, ISM PMIs, and NFP will be crucial for the Gold traders to watch for clear directions. Also important are the Caixin PMIs for June from China, as well as central bankers’ speeches.

Gold Price Technical analysis

Gold Price closed on a positive note the last week, despite posting a three-week losing streak.

That said, a clear rebound from the five-week-old bearish channel’s support joined the upside break of a fortnight-old descending resistance line, now immediate support around 36,032 South African Rand, to tease the short-term XAU/USD bulls.

Adding strength to the recovery hopes are the bullish signals from the Moving Average Convergence and Divergence (MACD) and upbeat conditions of the Relative Strength Index (RSI) line, placed at 14.

Furthermore, a clearance of the 50-SMA adds strength to the upside bias about the Gold Price.

However, the 200-SMA and the stated channel’s top line, respectively near 36,685 and 36,779 South African Rand, hold the key to the dominance of the Gold buyers.

On the contrary, a downside break of 36,032 South African Rand will again challenge the 35,760 South African Rand key support, comprising the aforementioned channel’s bottom line.

Also acting as the downside filter is the latest bottom surrounding 35,560 South African Rand, a break of which could quickly drag the XAU/USD price towards the early March swing high near 34,991 South African Rand.

*All currencies in the article have been converted to the South African Rand