• Gold price is stabilizing below $1,840.00 as investors await the release of the US PMI.
• Fed Powell stated that the economy is rock solid to bear the consequences of higher interest rates.
• The US PMI is expected to deliver a vulnerable performance.

Gold price (XAU/USD) is displaying volatility contraction as investors are shifting their focus to US Purchase Managers Index (PMI) figures after the testimony from Federal Reserve (Fed) chair Jerome Powell. The commentary from Fed Powell remained in line with the expectations of the market.

Fed Powell is in favor of maintaining the status quo as bringing price stability to the economy is their supreme motive. The economy is facing the headwinds of runaway inflation, however, the economy is much solid to bear the consequences of the price pressures. The labor market is really tight and is providing support to the Fed in extreme policy tightening. Demand for labor is extremely higher however its supply constraints are restricting more payrolls.

The positive commentary from Fed Powell on the US economy has fumed confidence in the sentiment of the market participants. Now, the PMI figures have become the focus area. As per the market consensus, investors should brace for a vulnerable performance. The Services PMI is seen at 49.1 against the prior print of 53.2. While the Manufacturing PMI is expected to slip to 54.7 from the former figure of 55.7. A slippage in the Services and the Manufacturing PMI eventually indicates a plunge in the aggregate demand.

Gold technical analysis

On an hourly scale, the gold prices have overstepped the downward sloping trendline placed from June 12 high at $1,879.26, adjoining June 16 high at $1,857.40. The precious metal is balancing and is expected to extend recovery after sustaining above the critical hurdle of $1,840.00. A bull cross, represented by 20- and 50-period Exponential Moving Averages (EMAs) at $1,835.20 add to the upside filters. The Relative Strength Index (RSI) (14) is expected to extend gains after violating 60.00 decisively.

Gold hourly chart