Gold Price Forecast: XAU/USD comfortable above $2,330 as Fed looms

XAU/USD Current price: $2,337.15

• The US Consumer Price Index eased by more than anticipated in May.
• Eyes turn to the Federal Reserve and Chairman Jerome Powell.
• XAU/USD advances modestly in a risk-on scenario, support at $2,330.

Spot Gold peaked at $2,341.51 on Wednesday, as the US Dollar fell following the release of the United States (US) Consumer Price Index (CPI). Markets turned wildly optimistic after the Bureau of Labor Statistics (BLS) reported that inflation rose less than anticipated in May, easing from April’s levels. The CPI rose 3.3% YoY and held unchanged on a monthly basis. Furthermore, the annual core CPI rose 3.4%, while the monthly figure was up by 0.2%, below expected and previous figures.

XAU/USD retreated from such a high after Wall Street’s opening as demand for high-yielding assets accelerated, undermining the positive momentum of the bright metal, although it holds to most of its intraday gains above the $2,330 mark.

The focus now shifts to the Federal Reserve(Fed). The Federal Open Market Committee (FOMC) is about to end its two-day meeting and announce its decision on monetary policy. Financial markets widely anticipate policymakers will leave the benchmark rate unchanged in a floating range between 5.25% and 5.50%. Following the release of US inflation-related figures, markets rushed to price in a 63% chance of a rate cut by September, up from roughly 47% before the event. Chairman Jerome Powell will conduct a press conference following the announcement and may shed light on whatever policymakers plan for the near future of monetary policy.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair is up for a third consecutive session, although gains are modest. The positive momentum is limited, as technical indicators advance, although within negative levels. At the same time, the 20 Simple Moving Average (SMA) maintains a modest downward slope above the current level, providing dynamic resistance at around $2,353.25. Finally, the 100 and 200 SMAs keep heading north well below the current level, limiting the downside.

In the near term, and according to the 4-hour chart, the risk for XAU/USD skews to the upside. The pair ran past its 20 SMA, which is currently losing its bearish slope. It remains below the 100 and 200 SMAs, both at around $2,345. Finally, technical indicators remain within positive levels but lost their positive momentum ahead of the Fed’s announcement.

Support levels: 2,328.90 2,313.30 2,300.00

Resistance levels: 2,345.00 2,353.25 2,368.70