• Gold price remains pressured towards the key support line from late July during three-day downtrend.
• Recession woes, firmer US data underpin hawkish Fed bets and strong US dollar.
• China trade numbers, Fedspeak will be important for fresh clues.

Gold price (XAU/USD) remains on the back foot at around $1,695 while portraying the three-day downtrend during Wednesday’s Asian session. In doing so, the precious metal justifies firmer US dollar strength amid a risk-off mood and higher yields. Also exerting downside pressure on the bullion are the hawkish Fed bets ahead of multiple speeches from the Fed policymakers including Chairman Jerome Powell.

US Dollar Index (DXY) stays firmer around the highest levels in 20 years, up 0.22% intraday near 110.50 at the latest, as firmer US data joined growing calls of the Fed’s aggression in September.

That said, US ISM Services PMI rose to 56.9 versus 55.1 market forecast and 56.7 prior. However, the S&P Global Composite PMI and Services PMI eased to 44.6 and 43.7 respectively versus 45.0 and 44.1 initial forecasts in that order. Even so, the US Dollar Index (DXY) rose after the release and refreshed a 20-year high. It should be noted that the CME’s FedWatch Tool signals 72.0% chance of 50 basis points (bps) Fed rate hike in September versus 57% one-day ago.

Additionally, the energy crisis and China’s covid woes also weigh on the XAU/USD prices as traders await the key data/events for the week, namely the European Central Bank (ECB) monetary policy meeting and Fed Chair Powell’s speech.

While portraying the mood, Wall Street closed in the red while the 10-year US Treasury yields jumped the most in a month to poke the highest levels since mid-June. It’s worth noting that the S&P 500 Futures print mild losses.

Looking forward, China’s monthly trade numbers will precede the Fedspeak to direct short-term gold price moves. Above all, fears of an economic slowdown could weigh on the XAU/USD.

Technical analysis

Gold price extends the previous day’s pullback from the 10-DMA, as well as a three-week-old resistance line, amid bearish MACD signals.

With this, the XAU/USD sellers are all set to break an upward-sloping support line from late July, around $1688.

Following that, the yearly low near $1680 may offer an intermediate halt during the metal’s slump targeting multiple lows marked during 2021 around $1677.

Alternatively, the 10-DMA and the aforementioned resistance line, around $1,718 and $1722 in that order, restrict the short-term upside of the gold price.

Gold: Daily chart

Trend: Further weakness expected