Gold Price Forecast: XAU/USD accelerates south after losing $2,400

XAU/USD Current price: $2,378.85

• Financial markets turn cautious ahead of central banks’ announcements.
• The Federal Reserve is likely to pave the way for a September rate cut this week.
• XAU/USD tunrned neutral-to-bearish in the near term, critical support at $2,366.

Spot Gold turned south after Wall Street’s opening and after spending the first half of the day consolidating just below $2,400. XAU/USD fell towards $2,369.57 and trades nearby as investors gear up for critical events spread throughout the week. Financial markets started the week with a firm footing, with Asian stocks posting substantial gains. European indexes, on the contrary, lost ground, leading to a tepid performance among their United States (US) counterparts.

US indexes hold on to modest intraday gains at the moment, with speculative interest focused on upcoming earnings reports and central banks’ decisions. The Bank of Japan (BoJ) will announce its decision on monetary policy early on Wednesday, followed later in the day by the US Federal Reserve (Fed). Finally, the Bank of England (BoE) will unveil its decision on Thursday.

Ahead of the announcements, financial markets are pricing in some adjustments. The BoJ is foreseen to reduce the monthly purchases of Japan Government Bonds (JGB), while the Fed is likely to pave the way for a September cut. As for the BoE, market players anticipate a 25 basis point (bps) rate cut.

XAU/USD short-term technical outlook  

The daily chart for XAU/USD shows the risk skews to the downside, although additional confirmation is required. The bright metal trades below a still bullish 20 Simple Moving Average (SMA), but technical indicators turned back south within neutral levels. At the same time, the pair is approaching the 61.8% Fibonacci retracement of its  June/July run at $2,366.30, the immediate support level. The 50% retracement at 2,403.10 acts as near-term resistance.

Technical readings in the 4-hour chart offer a neutral-to-bearish stance. XAU/USD is currently trading below a bearish 20 SMA, while a mildly bearish 200 SMA reinforces the support at around $2,366.00. Technical indicators, in the meantime, lack directional strength, with the Relative Strength Index (RSI) indicator currently consolidating at around 42, skewing the risk to the downside without confirming it.

Support levels: 2,366.30 2,353.00 2,339.65

Resistance levels: 2,388.25 2,403.10 2,418.15