• Gold price reverses the previous day’s bounce off monthly low.
• Sour sentiment weighs on the XAU/USD prices after US data triggered recovery.
• Recession, hawkish Fed bets are the key catalysts favoring bears.
• US Durable Goods Orders for July, Fed Chair Powell’s speech at Jackson Hole Symposium will be crucial for fresh impulse.

Gold price (XAU/USD) returns to the bear’s radar after the previous day’s failure to recall buyers near the monthly low. That said, the precious metal retreats to $1,746 during the mid-Asian session on Wednesday.

The bullion’s latest weakness could be linked to hawkish Fedspeak and the firmer US Treasury yields, not to forget the fears of economic slowdown, which in turn underpin the US dollar’s rebound and weigh on the XAU/USD amid a sluggish session.

Minneapolis Fed President Neel Kashkari mentioned that the biggest fear is that we are misreading underlying inflation dynamics, per Reuters. The policymaker also added that the Fed can relax on rate hikes when compelling evidence of CPI heading toward 2% seen.

US Dollar Index (DXY) poked the multi-year high the previous day before reversing from 109.27. That said, the fears of economic slowdown and the US Federal Reserve’s (Fed) aggressive rate hikes are the main factors that favor the DXY bulls even if the latest weakness in the US data triggered the quote’s pullback ,which in turn favored the gold buyers before teasing the bears of late.

The preliminary readings of the US S&P Global Manufacturing PMI for August eased to 51.3 versus 52.0 expected and 52.2 prior while the Services gauge plunged to 44.1 from 47.3, compared to 49.2 market forecasts. According to S&P Global, the US economy is also in trouble as the Composite PMI shrank to 45, its lowest in 27 months. Furthermore, the US New Home Sales for July dropped to the lowest levels in six years, to 0.511M from 0.585M prior and 0.575M market forecasts. Furthermore, the US Richmond Fed Manufacturing Index for August dropped to -8.0 compared to the 0.0 previous reading.

Traders in fed funds futures are pricing in a 52.5% chance of a 75 basis-point (bps) rate hike at the Fed meeting next month. On Monday the odds favored a slightly better-than-even chance of a 50 bp hike in September, per Reuters.

Elsewhere, Bloomberg recently came out with an analysis portraying the Chinese yuan’s fall as another worry for the dragon nation. “The Chinese yuan’s slump to its weakest against the dollar in almost two years adds to what is already a precarious balancing act for Beijing, which is seeking ways to prop up its struggling economy without stoking financial instability,” said the piece. The same weighs on the AUD/USD prices due to China’s status as one of the world’s largest gold consumers.

Talking about the market sentiment, US 10-year Treasury yields rose to the highest in a month, inactive at around 3.05% by the press time, whereas Wall Street benchmarks closed with mild gains. It’s worth noting that the S&P 500 Futures print mild losses by the press time.

Looking forward, a light calendar ahead of the North America session may restrict XAU/USD moves. Following that, US Durable Goods Orders for July, expected 0.6% versus 2.0% prior, will be important to watch for fresh clues. Above all, Friday’s speech by Fed Chairman Jerome Powell at the Kansas City Fed’s symposium in Jackson Hole will be crucial to follow.

Technical analysis

Gold price failed to cross the monthly horizontal hurdle, not to forget the 200-SMA, despite crossing a one-week-old bearish trend channel the previous day. The following pullback also takes clues from the RSI retreat to keep sellers hopeful.

However, the previous resistance line of the aforementioned channel, near $1,740, could act as the immediate support ahead of directing XAU/USD bears towards the latest swing low near the 61.8% Fibonacci Retracement of the July-August uptrend, near $1,730.

It should be noted that the lower line of the stated channel near $1,715, as well as the 78.6% Fibonacci retracement level surrounding $1,708, could entertain gold sellers afterward.

Meanwhile, the 200-SMA and the four-week-old horizontal resistance, respectively near $1,750 and $1,755, restrict short-term XAU/USD rebound.

Following that, multiple levels near $1,785 and $1,800 could challenge the gold buyers.

Gold: Four-hour chart

Trend: Further weakness expected