Gold Price Forecast: XAU/USD aims for a pullback towards $1,650.00, focus shifts to ISM data

• Gold price is looking for a pullback to near $1,650.00 as a cheerful market mood could weigh on DXY.
• Growing expectations for a 75 bps rate hike by the Fed helped yields to rebound.
• Higher consensus for US ISM New Orders Index indicates that forward demand is strong.

Gold price (XAU/USD) has witnessed fresh demand after a vertical drop to near $1,640.00. The precious metal is aiming for a pullback move to near the critical resistance of $1,650.00 as long liquidation hogs the limelight.

The US dollar index (DXY) remained restricted on Friday as the upbeat market sentiment capped gains around 111.00 while odds of a bigger rate hike by the Federal Reserve (Fed) remained a major cushion for the counter. As per the projections, Fed chair Jerome Powell will announce a fourth consecutive 75 basis point (bps) rate hike on Wednesday.

Higher odds for further policy tightening by the Fed helped yields to rebound after a major decline. The 10-year US Treasury yields reclaimed the psychological hurdle of 4%.

Going forward, the US ISM Manufacturing PMI data will remain in the spotlight. The economic data is seen lower at 50.0 vs. the prior release of 50.9. Also, the ISM New Orders Index will be a crucial catalyst that displays forward demand and is seen significantly higher at 49.1 against the former figure of 47.1.

Gold technical analysis

On an hourly scale, gold prices have rebounded after sensing less selling pressure while testing weekly lows at $1,638.15, recorded on Tuesday. The precious metal is playing with the 20-period Exponential Moving Average (EMA) at $1,644.39 while the 50-EMA at $1,651.15 is still higher.

Meanwhile, the Relative Strength Index (RSI) (14) is attempting to ditch the bearish range of 20.00-40.00.

Gold hourly chart