Gold Price Forecast: Tensions mount ahead of Fed, buyers keep defending $1,900

Valeria Bednarik FXStreet

XAU/USD Current price: $1,926.51

Additional signs of easing US inflationary pressures put the US Dollar under pressure.
US Federal Reserve monetary policy decision could shed light on a potential pivot.
XAU/USD bounced sharply after testing a critical threshold, further gains still unclear.

Spot gold plunged on US Dollar demand, with XAU/USD bottoming at $1,900.70 a troy ounce on Tuesday. Risk aversion dominated the first half of the day, but American traders experienced new hopes and turned their back on the Greenback, pushing the bright metal into positive ground.

The catalyst for the US Dollar decline was a minor report that US Federal Reserve officials have been paying close attention to. The United States Employment Cost Index rose in the last quarter of 2022 by 1%, below the 1.1% expected and easing from 1.2% in the previous quarter. Additional signs of easing inflationary pressures boosted high-yielding stocks ahead of the US Federal Reserve monetary policy decision, reviving hopes for a soon-to-come pivot. The American central bank is widely anticipated to hike rates by 25 bps, minimizing the odds of a severe recession.

At the same time, US Treasury yields retreated from their recent highs, with the 10-year note currently offering 3.53%, down 2 bps. Meanwhile, stocks managed to change course. European indexes trimmed their early losses and settled mixed around their opening levels, while US indexes trade in the green.

XAU/USD price short-term technical outlook

XAU/USD currently trades around $1,926, maintaining a positive tone according to technical readings in the daily chart. The bright metal sharply bounced from around a bullish 20 Simple Moving Average (SMA), which keeps advancing far above the longer ones. At the same time, technical indicators have turned flat within positive levels, losing their previous downward strength.

In the near term, and according to the 4-hour chart, gold is neutral, with further advances depending on a bullish breakout of the immediate resistance level at $1,935.10. The pair is currently battling to overcome a mildly bearish 20 SMA but developing above the 100 and 200 SMAs, which keep heading north. Technical indicators, in the meantime, have turned flat around their midlines, failing to provide directional clues.

Support levels: 1,910.00 1,896.50 1,884.30

Resistance levels: 1,935.10 1,950.00 1,966.15

View Live Chart for XAU/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.