Gold Price Forecast: XAU/USD flirts with $3,300 amid broad US Dollar strength

XAU/USD Current price: $3,310.10

• US trade deals and profit taking ahead of first-tier events fueled the US Dollar.
• The Federal Reserve will announce its decision on monetary policy on Wednesday.
• XAU/USD pressures the $3,300 level, aims to break below it.

Spot Gold plunged to $3,301.90 on Monday, as the US Dollar (USD) strengthened across the FX board. The Greenback surged following news that the United States (US) clinched a trade deal with the European Union (EU) while resuming talks with China. On the latter, US Trade Representative Jamieson Greer said that it is a good sign, yet added he does not expect a breakthrough.

Other than that, profit-taking ahead of multiple central bank announcements and first-tier data releases contributed to the USD's momentum. The Federal Reserve (Fed) will announce its decision on monetary policy next Wednesday, while the country will release the flash estimate of Q2 Gross Domestic Product (GDP) earlier in the day. The US will also release an updated Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge.

The Fed’s decision will be under scrutiny amid US President Donald Trump’s rage against Chairman Jerome Powell. The Fed is widely anticipated to keep interest rates on hold despite pressure from the White House to lower them. Encouraging growth and inflation figures would back Trump’s case, and add to Powell’s burden.

But is not just the Fed, the Bank of Canada (BoC) and the Bank of Japan (BoJ) will also announce monetary policy decisions, while other major economies will post updates on growth and inflation.

Meanwhile, global stocks are up, with Wall Street holding on to substantial gains but easing from its pre-opening peaks.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for XAU/USD shows it keeps posting lower lows and lower highs, in line with the ongoing downward trend. The pair has broken below a flat 20 Simple Moving Average (SMA), which currently provides dynamic resistance at around $3,345.00. At the same time, the Momentum indicator is flat at around its 100 line, but the Relative Strength Index (RSI) indicator anticipates another leg lower by heading firmly south at around 44. A bullish 100 SMA, in the meantime, provides support at around $3,250.

In the 4-hour chart, the XAU/USD is currently below all its moving averages, with an almost vertical 20 SMA about to cross below directionless and converging 100 and 200 SMAs in the $3,350 region. Technical indicators diverge in direction, but remain within negative levels. The Momentum advances amid the bounce from the intraday low, but remains well below its midline, while the RSI indicator maintains the downward pressure near oversold readings, hinting at another leg south.

Support levels: 3,301.90 3,287.30 3,274.05

Resistance levels: 3,325.00 3,345.00 3,361.80