Gold Price Forecast: XAU/USD extends consolidative phase above $2,500

Valeria Bednarik FXStreet

XAU/USD Current price: $2,513.31

Market players keep waiting for inflation updates and potential effects on central banks’ decisions.
US CB Consumer Confidence improved by more than anticipated in August.
XAU/USD is neutral-to-bullish in the near term, bulls taking their chances of dips.

Quiet trading extends on Tuesday, with Gold changing hands at around $2,510 a troy ounce. The bright metal is confined to a tight intraday range as expectations mount for the upcoming United States (US) inflation figures to be out on Friday. The country is set to release the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. Price pressures in the US remain above the Fed’s 2% goal but far from the four-decade high hit in mid-2022.

But it is not just about receding inflation. The labor market has finally shown signs of loosening, meaning wages-related risks have decreased. In the meantime, the economy keeps growing at a relatively healthy pace, all of which backs an interest rate cut. Chairman Jerome Powell and co have spent the last month hinting towards a shift in the current monetary policy, reinforcing the idea of a new cycle coming when he spoke at the Jackson Hole Symposium last week. Hopes the Fed will trim rates in September maintain the US Dollar under pressure.

Meanwhile, United States (US) data beat expectations. The Conference Board's (CB) Consumer Confidence Index rose to 103.3 in August, while the July figure was upwardly revised to 101.9 from 100.3. Furthermore, the Expectations sub-index improved to 82.5, while the July reading was revised to 81.1, marking the second consecutive month of the Index above 80. A reading below the latter usually signals a recession ahead.

XAU/USD short-term technical outlook

From a technical point of view, the risk for XAU/USD remains scheduled to the upside. The daily chart for the pair shows it keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its upward slope well above also bullish 100 and 200 SMAs. Technical indicators, in the meantime, have lost their upward strength but consolidate near overbought readings, falling short of suggesting an upcoming decline.

In the near term, and according to the 4-hour chart, XAU/USD is neutral-to-bullish. A flat 20 SMA keeps providing intraday support, while the 100 and 200 SMAs grind north far below the current level. Technical indicators, however, stand right above their midlines without clear directional strength. The risk of a steeper decline seems limited, but the lack of progress could force some profit-taking and send Gold below the $2,500 mark.

Support levels: 2,508.80 2,496.40 2,485.10

Resistance levels: 2,523.50 2,531.60 2,542.00

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD remains depressed 0.7000, awaits FOMC Minutes

AUD/USD struggles to capitalize on its recent recovery move and trades with a negative bias below 0.7000 in Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the pair under pressure despite hawkish RBA expectations. All eyes now remain on the FOMC Minutes.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold struggles below $4,150 as USD bulls look to FOMC Minutes for rate hike cues

Gold retains its intraday bearish bias through the early European session, eyeing a two-month low around the $4,100 neighborhood touched the previous day. The US Dollar catches fresh bids after Tuesday's corrective slide and is seen as a key factor weighing on the commodity as traders look to the FOMC meeting minutes for a fresh impetus.

Dogecoin extended correction and weakening momentum raise downside risks

Dogecoin extends its losses, trading around $0.090 down more than 5% so far this week. Bearish pressure is strengthening, with short positions reaching a one-month high and traders in overheated conditions. Meanwhile, weakening momentum indicators are also hinting at further losses in DOGE. Derivatives data shows cautious signals among traders.

Indian Rupee hits fresh four-month low, RBI hikes Repo Rate to 5.5%

The Indian Rupee weakens significantly against the US Dollar after a muted response, following the Reserve Bank of India’s monetary policy meeting on Wednesday. The USD/INR pair jumps to near 96.72, the highest level seen in four months. In the policy meeting, the RBI decide to hike its Repo Rate by 25 basis points to 5.5%, the first hike since February 2023.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.