Gold Price Forecast: XAU/USD pierces the $3,300 mark as the Fed looms

XAU/USD Current price: $3,297.87

• Federal Reserve Chairman Jerome Powell will have lots to explain today.
• Encouraging United States data fueled demand for the American currency.
• XAU/USD broke below the $3,300 level and could reach the $3,260 region.

Gold trades below the $3,300 mark shedding ground on the back of broad US Dollar’s (USD) strength. The Greenback maintained a strong footing ever since the week started, helped by encouraging headlines related to trade deals. However, the USD soared on Wednesday, following the release of unexpectedly encouraging United States (US) data and ahead of the Federal Reserve (Fed) monetary policy announcement.

Speculative interest welcomed news indicating that the US economy grew at a faster than anticipated pace in the second quarter of the year, while inflationary pressures in the same period eased. Even further, employment-related figures kept pointing at a solid labor market, which may be a bit of a concern for the Fed, but in general means the world’s largest economy is much healthier than feared.

The US ADP Employment Change report showed that the private sector added 104K new positions in July, much better than the 78K expected, and well-above the -33K expected. More relevant, the flash estimate of the Q2 Gross Domestic Product surpassed expectations, as the economy expanded at an annual rate of 3% in the second quarter, much better than the 2.4% anticipated or the -0.5% from Q1.

Finally, The core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge, indicated easing inflationary pressures as the index rose by 2.5% in the three months to June, down from the 3.5% posted in Q1.

XAU/USD remains pressured as investors gear up for the Fed announcement. The central bank is widely anticipated to keep interest rates on hold, floating between 4.25% and 4.50%. The central bank will release a statement with policymakers reasoning behind the decision. Finally, Chair Jerome Powell will offer a press conference, to further clarify officials’ stance.

Given that the decision has been long ago priced in, the focus will be on Powell’s words, and any hint he may give on future monetary policy decisions.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows a flat 20 Simple Moving Average (SMA) provides intraday resistance for a third consecutive day, rejecting advances at around $3,345. The 100 SMA, in the meantime, provides support at around $3,263.00, a potential bearish target should the USD keeps gaining ground. Finally technical indicators turned south below their midlines, supporting a downward extension.

The near-term picture is bearish. The 4-hour chart for the XAU/USD shows technical indicators head firmly south within negative levels, while the pair plummeted below all its moving averages, with the 20 SMA currently at around $3,325.00, extending its slide below directionless and converging 100 and 200 SMAs.

Support levels: 3,287.30 3,274.05 3,249.60

Resistance levels: 3,311.15 3,328.60 3,345.00