Gold Price Forecast: XAU/USD consolidates around $3,000 ahead of Fed

XAU/USD Current price: $2,997.05

• Softer-than-anticipated United States data weighs on US Dollar demand.
• The Federal Reserve will announce its decision on monetary policy on Wednesday.
• The XAU/USD pair consolidates at record levels, higher highs in sight.

A better market mood weighs on the US Dollar (USD), yet that same positive mood maintains Gold’s gains limited.

Spot Gold consolidates just below $3,000 a troy ounce on Monday, recovering the ground shed on Friday. A better market mood weighs on the US Dollar (USD), yet that same positive mood maintains Gold’s gains limited. Exacerbating range trading, the United States (US) Federal Reserve (Fed) is set to announce its decision on monetary policy next Wednesday.

The Fed is widely anticipated to keep the benchmark interest rate on hold at 4.25%-4.50% amid the uncertainty surrounding US President Donald Trump’s trade war and its impact on the economic performance of the world’s largest economy. However, the central bank will also release the Summary of Economic Projections (SEP) or dot-plot, a document providing a fresh view of the overall state of the American economy alongside officials' aims at interest rate moves. Finally, Chairman Jerome Powell will deliver a press conference to explain policymakers’ reasoning beyond the announcement.

In the meantime, softer-than-anticipated US data further weighs on the USD. The country released the New York Empire State Manufacturing Index, which fell to -20 in March, much worse than the -1.9 expected and the previous 5.7. The US also reported that Retail Sales were up 0.2% in February, below the 0.7% advance expected although better than the -1.2% posted in January.

XAU/USD short-term technical outlook

The XAU/USD pair consolidates near record highs, and the daily chart shows that buyers paused but did not give up. The pair stands well above a bullish 20 Simple Moving Average (SMA), which advances far above the 100 and 200 SMAs. Technical indicators, in the meantime, eased from extreme overbought levels and stabilized well above their midlines, suggesting sellers are nowhere to be found.

The near-term picture is bullish. Technical indicators in the 4-hour chart resumed their advances with uneven strength yet well into positive territory. Furthermore, XAU/USD trades above bullish moving averages, with the 20 SMA currently providing dynamic support at around $2,925.80.

Support levels:2,978.40 2,962.10 2,946.80

Resistance levels: 3,010.00 3,025.00 3,040.00