Gold Price Forecast: XAU/USD going nowhere in a hurry ahead of FOMC on Wednesday

• A combination of factors prompted some intraday selling around gold on Monday.
• COVID-19 jitters, weaker USD helped limit deeper losses, at least for the time being.
• Traders now eye Tuesday’s US economic data for some impetus ahead of the FOMC.

Gold struggled to capitalize on its modest intraday gains, instead met with some fresh supply near the $1,811-12 region and ended in the red for the second straight session on Monday. In the absence of any major market-moving economic releases, a goodish rebound in the US equity markets turned out to be a key factor that undermined the safe-haven precious metal. The risk-on impulse allowed the US Treasury bond yields to recover a major of their intraday sharp fall and exerted some additional pressure on the non-yielding yellow metal.

Bulls seemed rather unaffected by a broad-based US dollar weakness, which tends to benefit dollar-denominated commodities, including gold. Nevertheless, the XAU/USD finally settled near the lower end of its daily trading range, though lacked any follow-through selling. Worries about the economic fallout from the fast-spreading Delta variant of the coronavirus acted as a tailwind for the metal. This, in turn, helped limit any further losses, rather assisted the commodity to gain some positive traction during the Asian session on Tuesday.

Looking at the broader picture, the XAU/USD has been oscillating in a familiar trading range over the past one week or so. Investors seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of this week's event risk – the FOMC meeting starting this Tuesday. Policymakers are expected to discuss plans about slowing the pace of monthly bond purchases. The Fed is scheduled to announce its decision on Wednesday, which will influence the greenback in the near term and provide a fresh directional impetus to the commodity.

In the meantime, traders on Tuesday will take cues from the US economic docket, highlighting the releases of Durable Goods Orders and the Conference Board's Consumer Confidence Index. This, along with developments surrounding the coronavirus saga, the broader market risk sentiment, the US bond yields and the USD price dynamics might produce some trading opportunities around the XAU/USD.

Short-term technical outlook

From a technical perspective, the $1,790 level might continue to protect the immediate downside and act as a pivotal point for short-term traders. Sustained weakness below might prompt some aggressive technical selling and accelerate the slide further towards the $1,765-60 support area. This is followed by monthly swing lows, around the $1,750 area, which if broken decisively will shift the near-term bias back in favour of bearish traders.

On the flip side, the $1,807-10 area now seems to have emerged as immediate strong resistance. Any subsequent positive move is more likely to confront a stiff resistance near the very important 200-day SMA, currently around the $1,822-23 region. A convincing breakthrough the mentioned barrier will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The XAU/USD might then climb towards the $1,845-46 region, en-route the next major hurdle near the $$1,866 zone. Some follow-through buying has the potential to lift the commodity further and allow bulls to aim to reclaim the $1,900 round-figure mark.