Gold Price Forecast: XAU/USD holds within familiar level ahead of FOMC Minutes

XAU/USD Current price: $1,971.81

• The FOMC Meeting Minutes could shed some light on the future of monetary policy.
• Mixed S&P Global PMIs added to the sour ruling mood.
•  XAU/USD keeps seesawing within familiar levels and is at risk of falling further.

XAU/USD fell to an intraday low of $ 1,954.22 during European trading hours as market concerns backed demand for the American currency. Gold managed to recover some ground against the US Dollar and currently trades at around $1,972, little changed for a second consecutive day.

Financial markets are risk-averse on Tuesday amid tepid macroeconomic data and uncertainty about the Federal Reserve's (Fed) next steps. United States policymakers went for a dovish hike early in May, hiking rates by 25 basis points (bps) and anticipating future decisions would be data-dependent and taken meeting by meeting. Speculative interest rushed to price in a pause in hikes as Fed officials expressed concerns about what additional tightening could do to the banking system.

Over the last few days, however, different Fed members surprised with hawkish messages, most hinting at one and even two more rate hikes on the docket. The FOMC will release the Minutes of its latest meeting on Wednesday, and investors expect to get clearer clues on the future of monetary policy.

Data-wise, S&P Global published the preliminary estimates of the May PMIs. The US services sector grew at a faster-than-anticipated pace, with the index up to 55.1. However, manufacturing output contracted to 48.5, a three-month low. Finally, the Composite PMI surged to 54.5, an over one-year high. Europe presented a similar picture, with services output accelerating and industrial activity contracting.

XAU/USD price short-term technical outlook

The daily chart for XAU/USD shows that it trades mid-way between a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around $2,002.40, and a bullish 100 SMA at $1,931.60. At the same time, technical indicators remain within harmful levels, with the Momentum indicator maintaining its bearish slope well into negative territory and the Relative Strength Index (RSI) indicator consolidating around 44. Overall, the risk remains skewed to the downside, with sellers likely adding on approaches to the $2,000 region.

In the near term, and according to the 4-hour chart, XAU/USD offers a neutral stance. The pair is just above the 20 SMA, which losses its bearish strength but far below the longer one. At the same time, technical indicators stand pat around their midlines, reflecting the absence of clear directional strength. Bulls could regain control if the pair breaks above $1,984.16, May 19 daily high.

Support levels: 1,961.60 1,944.00 1,931.60  

Resistance levels: 1,984.20 1,996.80 2,002.40

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