Gold Price Forecast: XAU/USD breakout is imminent, FOMC awaited

• Gold benefitted from COVID-19 jitters, risk-off impulse, weaker USD, sliding US bond yields.
• The upside seems limited as the focus remains on the latest FOMC monetary policy decision.

Gold seesawed between tepid gains/minor losses and finally settled with modest gains on Tuesday, though remained below the key $1,800 mark for the second successive session. The shaky risk sentiment was seen as one of the key factors that acted as a tailwind for the safe-haven precious metal. Investors remain worried about the potential economic fallout from the fast-spreading Delta variant of the coronavirus. This, along with China's regulatory crackdown on the education technology sector, sent ripples through the global equity markets.

Meanwhile, the US dollar traded with a softer bias and extended some additional support to the dollar-denominated commodity. The greenback was pressured by a sharp decline in the US Treasury bond yields and rather uninspiring US macro data. In fact, the headline Durable Goods Orders recorded a modest 0.8% growth in June as against 2.1% anticipated. Orders excluding transportation items also fell short of market expectations and rose 0.3% during the reported month. This overshadowed an upward revision of the previous month's reading.

Separately, the Conference Board's US Consumer Confidence Index unexpectedly edged higher from 128.9 to 129.1 in July and remained near its highest level since February 2020. The data did little to impress the USD bulls or provide any meaningful impetus to the commodity. However, an intraday bounce in the US Treasury bond yields helped limit any deeper losses for the greenback. That said, the risk-off impulse in the markets assisted the XAU/USD to gain some follow-through positive traction through the Asian session on Wednesday.

The upside is likely to remain limited as investors might refrain from placing any aggressive bets ahead of the conclusion of a two-day FOMC monetary policy meeting. The Fed is scheduled to announce its decision later during the US session and market participants will look for a clear answer about the crucial question of when the tapering will begin. The outcome will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the XAU/USD.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much for the metal and any subsequent move beyond the $1,810 level is likely to confront a stiff resistance near the very important 200-day SMA. The mentioned barrier is currently pegged near the $1,823 area, which if cleared will set the stage for additional gains. The XAU/USD might then accelerate the momentum towards the $1,845-46 region, en-route the next major hurdle near the $$1,866 area. Some follow-through buying has the potential to lift the commodity further and allow bulls to eventually aim to reclaim the $1,900 round-figure mark.

On the flip side, weakness below the $1,800 mark might continue to find decent support near the $1,790 area. This should now act as a key pivotal point for bearish traders, which if broken decisively might prompt some aggressive technical selling. The next relevant support is pegged near the $1,765-60 region before the metal eventually drops to challenge monthly swing lows, around the $1,750 region.