Gold Price Forecast: Bear Flag, Powell Teases XAU/USD Sellers, $1,750 in Focus

Early Friday morning in Europe, gold price (XAU/USD) recovers off intraday low as sellers retreat from $1,750 support. Gold posts its first daily loss in three around the week's high.

The bullion's latest downturn may be due to market pessimism ahead of the Fed's favored inflation announcement and Jackson Hole address. China, Iran, and Taiwan may add to the negative mood.

China's county near Beijing declared lockdown due to covid, joining the US suspension of 26 Chinese carrier flights in response to Beijing's action. An expanded defense budget, a rise in US diplomats visiting Taipei, and US President Joe Biden's stern stance on Iran's position in Syria appear to have weighed on market sentiment.

Mixed US data, Fedspeak, and a drop in US Treasury yields supported gold's recent run-up. The second estimate of US GDP Annualized improved to -0.6% in Q2 from -0.9% flash estimates and -0.8% market projections. US Initial Jobless Claims declined to 243K for the week ended August 19, compared to 253K predicted and 245K revised.

Kansas City Fed President Esther George stated Thursday, "For the near term, higher rates appear appropriate." The policymaker also said it's too early to determine what to expect in September due to upcoming critical data. Philadelphia Fed President Patrick Harker said he wants to see the next inflation number before deciding on the September rate decision, but a 50 basis point boost would still be big. Atlanta Fed President Raphael Bostic told the WSJ, "I'd toss a coin between 50 bps and 75 bps," adding, "If data remains solid and inflation doesn't fall, it may create a case for another 75 bps."

China's over $1 trillion stimulus and a holistic strategy by local institutions helped metal prices.

S&P 500 Futures deviate from Wall Street's advances and fall to 4,195. US 10-year Treasury rates rose two basis points (bps) to 3.045% at press time, illustrating the risk-off mood.

Before Fed Chair Powell's Jackson Hole speech, XAU/USD traders may see an idle session. The Fed's chosen inflation gauge, the US Core PCE Price Index, may interest speculators. Forecasts predict YoY growth of 4.7%, down from 4.8%, and monthly growth of 0.3%, down from 0.6%.