Gold Price Forecast: XAU/USD pierces $1,900 ahead of FOMC Minutes

XAU/USD Current price: $1,900.05

• Upbeat United States data provides an additional boost to the Greenback.
• FOMC Meeting Minutes to shed some light on the future of monetary policy.
• XAU/USD bearish route continues with $1,900 giving up.

Spot gold hovers just above the $1,900 mark as the US Dollar retains its leadership in a risk-averse environment, also helped by encouraging United States (US) data. The country reported that Building Permits were up 0.1% MoM in July, while Housing Starts in the same period increased by 3.9%, much better than anticipated. Furthermore, Industrial Production rose 1%, while Capacity Utilization jumped to 79.3%. The figures followed upbeat Retail Sales released on Tuesday and boosted speculation the economy will avoid a steep recession, moreover considering the Federal Reserve (Fed) is at the end of its tightening cycle.

Speaking of which, the Federal Open Market Committee (FOMC) is about to publish the July meeting Minutes, expected to shed some light on the future of monetary policy. At this point, market players bet the Fed will remain on hold in September and most likely maintain the trajectory for the rest of the year, to change course and opt for rate cuts in 2024. The American central bank has become data-dependant, focusing mainly on the labor market, given its persistent tightness.

Odds for an on-hold stance in September stand at 88.5%, while the chances of a 25 basis points (bps) hike in November are 36.2%, according to the CME FedWatch Tool. Financial markets are seeking confirmation on whether the September hike was the last one. It’s highly unlikely the FOMC document would deliver a clear answer, yet there’s always a chance.

XAU/USD price short-term technical outlook

The daily chart for the XAU/USD pair shows that it continues to post lower highs while currently developing below its 200 Simple Moving Average (SMA) for the first time this year. Also, the 20 SMA accelerated lower above the longer one while below a mildly bearish 100 SMA, reflecting continued selling pressure. Technical indicators, in the meantime, remain within negative levels, with the Relative Strength Index (RSI) indicator heading south at around 34, also indicating bears retain control. 

In the near term, and according to the 4-hour chart, lower lows are at sight. A bearish 20 SMA caps advances, while the 100 SMA extends its slide below the 200 SMA, both far above the shorter one. Furthermore, technical indicators gain downward momentum within negative levels, anticipating a break through this week’s low at $1,896.33.

Support levels: 1,896.30 1,888.30 1,879.95

Resistance levels: 1,915.30 1,9221 1,934.85  

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