Gold Price Forecast: XAU/USD looks to recapture $1,900, falling wedge, Jackson Hole eyed

• Gold Price portrays bearish consolidation at multi-month low.
• China stimulus, positioning for Jackson Hole Symposium challenge XAU/USD sellers.
• Falling wedge confirmation adds strength to bullish bias about the Gold Price.
• XAU/USD bulls need validation from US PMIs, Durable Goods Orders and Fed Chair Powell’s hawkish tone.

Gold Price (XAU/USD) manages to hold ground near the lowest level in five months, recently picking up bids to around $1,895 amid the early hours of Tuesday’s Asian session.

The XAU/USD pair benefits from the US Dollar’s pullback and China headlines, as well as the market’s positioning for this week’s top-tier central bankers’ speeches at the Jackson Hole Symposium. The metal’s latest bearish consolidation, however, pays little heed to the multi-year high United States Treasury bond yields and the mixed sentiment in the market, which in turn raises doubts about the Gold Price recovery. It should be noted that the latest falling wedge confirmation also favors the intraday buyers of the bullion.

Gold Price traces sluggish US Dollar

Gold Price picks up bids after restraining to refresh the five-month low marked the last week. The reason could be linked to the US Dollar’s sluggish performance ahead of this week’s preliminary readings of the August month Purchasing Managers Indexes (PMIs) and Durable Goods Orders for July, as well as the central bankers’ speeches at the annual Jackson Hole Symposium event, scheduled between August 24 and 26.

Additionally, the previous week’s mostly upbeat United States data prod the Federal Reserve (Fed) doves but some of the top-tier US banks appear struggling to confirm Fed Chair Jerome Powell’s hawkish move at the Jackson Hole. That said, Goldman Sachs expects Fed Chair Powell to sound defensive during the annual event of the central bankers but the Bank of America (BofA) expects Fed’s Powell to push back against the rate cut expectations.

During the last week, upbeat activity and wage growth numbers joined hawkish Fed Minutes to enable the US Dollar Index (DXY) to print a fifth weekly run-up. The same also challenged the previous policy pivot concerns and escalate the market’s anxiety before this week’s central bankers’ speeches at the Kansas Fed’s annual event.

Apart from the US Dollar, firmer prints of the United States Treasury bond yields also underpin the hawkish bias about the Fed and challenge the Gold buyers. That said, the US 10-year Treasury bond yields rose to the highest level since 2007, to around 4.354% before ending Monday’s trading day near 4.34%.

China stimulus, risk catalysts prod XAU/USD bears

A slew of China measures to restore the Gold buyer’s confidence struggled to gain acceptance, which in turn challenged the Gold buyers.

On Monday, the People’s Bank of China (PBOC), lowered the one-year Loan Prime Rate (LPR) to 3.45% from 3.55% previous and 3.40% expected. However, the Chinese central bank kept the five-year LPRs unchanged at 4.20%.

On the same line, Chinese state media Xinhua unveiled the news stating the authorities’ plan to introduce subsidies for fertilizers and pesticides in the northern region of the nation, per Reuters. Furthermore, the weekend news from China suggests the policymakers’ plan to infuse more liquidity into the world’s second-largest economy.

Late Monday, the UBS cut China’s 2023 real GDP growth forecast to 4.8% from 5.2%, which in turn pushed the Dragon Nation to take more measures to defend the economy and put a floor under the Gold Price.

It’s worth noting that the news of the nation’s key real estate company and a shadow trust bank struggling to pay their bond commitments triggered the fears of China debt markets and drowned the XAU/USD previously.

Alternatively, the Financial Times (FT) reported during the weekend that China pushes for competition with the Group of Seven (G7) nations while marking its presence at the BRICS meeting where officials from Brazil, Russia, India, China and South Africa spoke. Additionally, the fresh tension between China and Taiwan adds strength to the geopolitical fears but fails to gain major attention amid the cautious mood ahead of this week’s top-tier data/events.

It should be noted that the geopolitical tension surrounding China tests the Gold buyers but the metal’s traditional haven status might allow the XAU/USD to lick its wounds.

All eyes on Jackson Hole but US data may entertain Gold traders

Overall, the mixed markets allow the Gold Price to portray a bearish consolidation ahead of this week’s top-tier data/events. However, major attention will be given to Friday’s Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium. Should Powell manages to defend the hawks, the XAU/USD may witness further downside.

Also read: Gold Price Forecast: XAU/USD consolidates losses ahead of first-tier events

Gold Price Technical Analysis

Gold Price teases buyers via a three-week-old falling wedge bullish chart formation. Adding strength to the upside bias is the nearly oversold conditions of the Relative Strength Index (RSI) line, placed at 14, as well as the recent bullish signals from the Moving Average Convergence and Divergence (MACD) indicator.

It’s worth noting, however, that a successful XAU/USD run-up beyond $1,890 becomes necessary for the Gold Price to aim for the theoretical target of the stated falling wedge, close to $1,980.

That said, the $1,900 round figure and the 200-bar Simple Moving Average (SMA) of around $1,940 will act as an extra filter toward the north.

On the contrary, the stated wedge’s bottom line surrounding $1,880 puts a floor under the Gold Price for the short term. Following that, a gradual downturn towards the early March swing high of around $1,858 can’t be ruled out.

However, the XAU/USD’s sustained trading beneath $1,858 won’t hesitate to challenge the yearly low marked in February near $1,805.

To sum up, the Gold Price appears losing downside momentum but the buyers have a long and bumpy road ahead of retaking control.

Gold Price: Four-hour chart

Trend: Limited recovery expected