XAU/USD drops to near $1,810 despite lackluster US Dollar amid a festive week

• Gold price has slipped sharply to near $1,810.00 despite less volatility due to the festive mood.
• The risk profile seems averse as US equities are facing immense heat.
• Gold price dropped back into the Ascending Triangle after a failed breakout attempt.

Gold price (XAU/USD) is declining at a decent pace in the Asian session after failing to sustain above the critical resistance of $1,830.00 on Tuesday. The precious metal delivered a wild gyration but failed to keep reins as the US Dollar Index (DXY) defended the downside and reclaimed the 104.00 hurdle. The Gold price has dropped to near $1,810.00 and is displaying volatility despite less trading activity due to the festive mood.

Meanwhile, the risk profile has turned averse as S&P500 faced selling interest by the market participants. S&P500 futures have continued their weak performance and will remain on the tenterhooks amid the unavailability of a critical trigger. The 10-year US Treasury yields have witnessed a minor selling pressure but are still holding 3.85%.

The decline in the demand for US Durable Goods, and a steep fall in the Personal Consumption Expenditure (PCE) Price Index have raised expectations for early cuts by the Federal Reserve (Fed) in its policy rates. Economists at ING shared an opinion that the recession will accelerate inflation’s slide and will allow the Fed to respond with rate cuts before CY2023 is out.

Gold technical analysis

On a four-hour scale, Gold price has reversed into the Ascending Triangle chart pattern after a failed breakout attempt. The horizontal resistance of the aforementioned chart pattern is plotted from December 13 high of around $1,824.55 while the upward-sloping trendline is placed from November 28 low at $1,738.73.

Gold price is still above the 20-period Exponential Moving Average (EMA) at around $1,807.00, which indicates that the upside is still solid. Meanwhile, the Relative Strength Index (RSI) (14) has failed to sustain above 60.00 and has dropped into the 40.00-60.00 range, which indicates a consolidation ahead.

Gold four-hour chart