The price of gold fell to a new multi-month low of $1,910 after breaking below a three-week trading range. Growing concerns about a global economic downturn, combined with major central banks’ hawkish stance, may make it difficult for XAU/USD to stage a major rebound in the near term. That being said, a corrective move upwards is possible in the coming week.

In any case, this is a market that has been bullish for quite some time, but if we turn around and show signs of support, we may be able to continue higher, possibly hitting the $1950 level, if not further. If we can demonstrate that kind of a momentum, we may look to the $2000 level above, which is also a large, round, psychologically significant figure and an area that will draw a lot of attention.

Last week, FOMC Chairman Jerome Powell stated on the first day of his congressional testimony on Wednesday that it will be reasonable to raise interest rates “somewhat further” by the end of the year. Powell reaffirmed that they will assess the implications of incoming macroeconomic data on the economy and make policy decisions meeting by meeting. These remarks had little to no impact on market expectations for a 25 basis point (bps) Federal Reserve (Fed) rate increase in July. As a result, the 10-year US Treasury bond yield remained over 3.7%, limiting a rebound in XAU/USD.

Our Expectation for the coming week

Even though technical indicators show the strength of the bears, we can expect at least a corrective move upwards. This move can even become strong if it breaks through 1950 levels.

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