Gold Price Forecast: XAU/USD awaits acceptance above this key hurdle, as Fed meet kicks off

• Gold price: Monday’s rebound stalls as the US dollar firms up ahead of Fed.
• Pullback in Treasury yields could revive bullish interest in gold.
• Gold price eyes a firm break above $1,793 to target $1,809 resistance.

Amidst thin thin holiday trading on Monday, gold price managed to recoup more than half of Friday’s sell-off. The bright metal kept below the $1,800 level, however, as investors remained cautious heading into a crop of key central banks’ policy decisions. Despite a hawkish Fed, the US dollar pared its previous gains and tumbled after the set of American Manufacturing PMIs came in mixed and suggested that the supply chain crises continued to constrain economic activity early in the fourth quarter. The retreat in US Treasury yields across the curve also aided gold's rebound. Gold price pulled back from highs, later on, as the record close on Wall Street indices dented the metal’s safe-haven appeal.

This Tuesday, with the Fed commencing its two-day monetary policy meeting and the RBA discontinuing its 2024 bond yield target, investors remain edgy which prompted a minor rebound in the greenback across the board. Gold’s upside appears capped for now but should US yields extend their corrective pullback, gold bulls could jump in once again, targeting for the $1,800 level.

Gold price action is likely to remain limited, as traders refrain from creating any fresh directional positions amid wide expectations that the Fed will begin tapering from this month. Thursday’s Bank of England (BOE) policy announcement will also be in focus, followed by Friday’s NFP data.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

Gold is clinging onto the $1,793 level, which is the confluence of the 21 and 50-Simple Moving Averages (SMA) on the four-hour chart.

A four-hourly candlestick closing above the latter is needed to provide more legs to Monday’s rebound. Gold bulls will then look to recapture the $1,800 mark on their journey towards falling trendline resistance at $1,809.

The Relative Strength Index (RSI) is inching higher above the midline, allowing more room for upside gains.  

On the flip side, sellers may eye an immediate target at the upward-sloping 100-SMA of $1,783, below which Friday’s low of $1,772 will come into the picture.

The horizontal 200-SMA at $1,769 will be a line in the sand for gold optimists.