Gold Price Forecast: XAU/USD establishes below $1,700, more weakness likely ahead of Fed Powell’s speech

• Gold price is sustaining below $1,700.00 as the DXY has strengthened further.
• The DXY has printed a fresh two-decade high at 1106.65 on robust US ISM Services PMI data.
• The precious metal may find support at around $1,680.00.

Gold price (XAU/USD) has displayed a vertical downside move in the Asian session and has printed a fresh four-day low below $1,693.00. The precious metal sensed a sheer downside momentum after delivering a downside break formed the consolidation formed in a narrow range of $1,700.00-1,704.08. The yellow metal is expected to display more weakness as the US dollar index (DXY) is picking bids ahead of the speech from Federal Reserve (Fed) chair Jerome Powell, scheduled for Thursday.

Price pressures in the US economy, last recorded at 8.5% for July, indicated that the inflation rate has topped now and the downside cycle has initiated. However, the whooping figure of 8.5% has widely deviated from the desired rate of 2%. Therefore, the Fed cannot halt the rate hike cycle till the price rise index display a meaningful downside.

Meanwhile, the US dollar index has refreshed its two-decade high at 110.65. As the US economic indicators are delighting the Federal Reserve (Fed) and are providing them room for escalating the interest rates further, the DXY is marching higher. On Thursday, investors should brace for a hawkish stance on interest rates by Fed chair Jerome Powell.

Gold technical analysis

Gold prices are plummeting and may find a cushion around July 21 low at $1,680.90. The 50-period Exponential Moving Average (EMA) at $1,717.65 has acted as major resistance for the counter. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which signals a continuation of downside momentum.

Gold four-hour chart