Gold Price Forecast: Will Fed Minutes help validate bullish wedge for XAU/USD?


  • Gold price hits weekly highs on the US Independence Day-led thin trading.
  • US Dollar capitalizes on recession fears and US-Sino tech fight ahead of the Fed Minutes.  
  • Gold price needs a daily close above $1,922 to confirm a bullish wedge but bearish RSI warrants caution.  

Gold price is consolidating a minor uptick to week highs of $1,931 seen on Tuesday, as bulls and bears remain in a tug-of-war early Wednesday. Gold price is bracing for a return of the United States traders after an extended Independence Day holiday, awaiting the Minutes of the US Federal Reserve (Fed) June policy meeting.

 United States Dollar holds ground ahead of Federal Reserve Minutes

Amidst July 4 thin market conditions, the United States Dollar (USD) managed to find its footing across the board, courtesy of growing recession fears, as the Federal Reserve is likely to continue with its rate hike track to tame inflation. The impact of the Fed tightening is already worsening the US business conditions, as the country’s manufacturing sector contraction deepened in June, according to the latest ISM data published on Monday.

The risk-averse market environment capped the recent uptrend in the US Treasury bond yields, driving the non-yielding Gold price to fresh weekly highs. However, Gold sellers continued to lurk above the $1,930 mark amidst resurgent US Dollar demand.

In early Wednesday’s trading, risk-off flows continue dominating as risks of a revival in the US-China trade war are back on the table after the US curbed AI chips’ shipments to Beijing. In response, China announced abrupt controls on exports of some gallium and germanium products, effective from August 1. Meanwhile, there are reports that US President Joe Biden’s administration is preparing to restrict Chinese companies’ access to US cloud-computing services.

If the trade tensions intensify, the US Dollar is likely to draw plenty of safe-haven bids, in turn, weighing on the USD-denominated Gold price. The focus also remains on the Fed Minutes due later in American trading for fresh insights on the Fed rate hike path, eventually influencing the Gold price direction ahead of the key US jobs data slated for release in the latter part of the week.

Gold price technical analysis: Daily chart

Gold price remains on track to confirm a bullish wedge, awaiting a daily close above the critical falling trendline (wedge) resistance, now at $1922. Gold price has been trading within a falling wedge after topping out at record highs of $2080 in early April.  

However, it remains to be seen if Gold bulls succeed to regain the upside traction, as a Bear Cross and bearish Relative Strength Index (RSI) continue to warrant caution.

Acceptance above the falling trendline resistance of $1,922 on a daily closing basis will open doors for a fresh upswing toward the $1,950 threshold, where the mildly bullish 50-Daily Moving Average (DMA) hangs. Ahead of that, Gold buyers could run into stiff resistance at the downward-sloping 21 DMA at $1,934.

On the downside, immediate support awaits at Monday’s low of $1,910, below which the $1,900 key level will be tested. The next cushion is envisioned at the three-month low of $1,893.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD begins Thursday’s session flat ahead of RBA Hunter speech

AUD/USD begins Thursday’s session flat ahead of RBA Hunter speech

The Aussie Dollar tumbled more than 0.50% on Wednesday versus the Greenback amid elevated US Treasury yields, as another bond auction witnessed softer demand. The AUD/USD trades near 0.6608, almost flat as Thursday’s Asian session commences.

AUD/USD News

EUR/USD tumbles back to 1.08 region, investors turn to US GDP and PCE inflation

EUR/USD tumbles back to 1.08 region, investors turn to US GDP and PCE inflation

EUR/USD pulled back sharply on Wednesday, falling back to the 1.0800 handle after broad risk appetite evaporated. The pair is trading firmly into technical resistance as investors gear up for a batch of mid-tier European economic indicators on Thursday, followed by an update to US quarterly GDP growth.

EUR/USD News

Gold slumps amid strong US Dollar, high US Treasury yields

Gold slumps amid strong US Dollar, high US Treasury yields

Gold prices slump on Wednesday amid rising US Treasury yields, boosting demand for the Greenback due to hawkish comments by a Federal Reserve official. Consequently, sentiment shifted sour, the US Dollar climbed, and the XAU/USD is trading at $2,339.

Gold News

Ethereum sideways move persists, analyst says ETH ETF will only see 20% of Bitcoin flows

Ethereum sideways move persists, analyst says ETH ETF will only see 20% of Bitcoin flows

Ethereum sustained its sideways movement on Wednesday as Bloomberg analyst Eric Balchunas compared spot ETH ETFs to Silver ETFs, predicting that they will only see 20% of the flows recorded across Bitcoin ETFs.

Read more

Dow Jones Industrial Average sheds 400 points on Wednesday as risk aversion weighs

Dow Jones Industrial Average sheds 400 points on Wednesday as risk aversion weighs

The Dow Jones Industrial Average is broadly lower on Wednesday, shedding over 400 points and backsliding below 38,500.00. The major equity index is down nearly nine-tenths of a percent as investor sentiment sours.

Read more

Majors

Cryptocurrencies

Signatures