Gold Price Forecast: XAU/USD loses bullish momentum as focus shifts to FOMC Minutes

  • XAU/USD trades in a relatively tight channel on Wednesday.
  • Modest rebound seen in US Treasury bond yields limits gold's upside.
  • Investors wait for FOMC to release the minutes of March 16-17 meeting.

The XAU/USD pair registered strong gains on Tuesday and closed near the key resistance located at $1,745. However, the pair lost its momentum on Wednesday and seems to have gone into a consolidation phase. As of writing, gold was down 0.25% on a daily basis at $1,738.

A modest rebound witnessed in the US treasury bond yields made it difficult for XAU/USD to continue to push higher. The benchmark 10-year US T-bond yield, which lost more than 3% on Tuesday, rose as much as 1% on Wednesday and allowed the greenback to stay resilient against its peers. 

The only data from the US showed on Wednesday that the Goods and Services Trade Balance fell to -$71.1 billion in February and missed the market expectation of -$70.5 billion. Market participants largely ignored this report and Wall Street's main indexes started the day mixed.

Later in the session, US President Joe Biden will deliver a speech on the details of his administration's spending package. More importantly, the FOMC will release the minutes of its March 16-17 policy meeting. The US T-bond yields' reaction to these events is likely to impact XAU/USD's movements in the late American session.

Gold technical outlook

Following Tuesday's upsurge, Wednesday's choppy action suggests that XAU/USD is looking for a significant catalyst before making a decisive move in either direction. On the daily chart, the Relative Strength Index (RSI) indicator is moving sideways a little above 50, reaffirming the neutral near-term outlook with a slightly bullish bias.

On the upside, the initial resistance is located at $1,745. On Tuesday, gold failed to break above that level for the fifth time since mid-March. $1,755 (March 18 high) aligns as the next hurdle ahead of $1,764 (50-day SMA).

Supports, on the other hand, are located at $1,730 (20-day SMA), $1,720 (lower limit of the latest horizontal channel) and $1,700 (psychological level). As long as gold manages to hold above $1,720, sellers could remain hesitant to try to dominate the price action.

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