Gold Price Forecast: XAU/USD pressures one-week high as Fed looms

XAU/USD Current price: $2,428.48

• The Federal Reserve will likely keep rates on hold ahead of a September cut.
• Chairman Jerome Powell could provide fresh clues on monetary policy.
• XAU/USD pressures daily highs and aims to extend gains in the near term.

Spot Gold trades at fresh one-week highs around $2,428 a troy ounce as the Federal Reserve´s (Fed) monetary policy announcement looms. The US Dollar trades mixed across the FX board, firmer against European rivals but losing ground against commodity-linked currencies. Stock markets, in the meantime, post gains amid mounting hopes the United States (US) central bank will anticipate a looser monetary policy.

Chairman Jerome Powell and co. are expected to keep interest rates on hold this time yet somehow hint at a cut coming in the next meeting, to be held in September. An interest rate cut by then has been fully priced in. Speculative interest is also looking for clues on an additional cut before year-end, particularly in the press conference Chair Powell will deliver after the initial announcement.

Ahead of the announcement and according to the CME FedWatch Tool, there is roughly a 70% probability that the Fed will cut the policy rate by a total of 75 basis points in 2024.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart shows that XAU/USD could extend gains. Given USD's broad weakness ahead of the event, a dovish Powell may back a bullish extension. In the mentioned time frame, the pair trades above bullish moving averages, while technical indicators hold within positive levels, although lacking clear directional strength. Furthermore, the pair has extended its recovery from the 61.8% Fibonacci retracement of the June/July rally and currently trades above the 38.2% retracement at 2,410.80, the immediate support level.

In the near term, and according to the 4-hour chart, the risk skews to the upside, although the momentum faded ahead of the announcement. Nevertheless, technical indicators remain well above their midlines, while a bullish 20 Simple Moving Average (SMA) accelerates north well below the current level, aiming to cross above a mildly bullish 100 SMA. The next Fibonacci retracement and immediate resistance level comes at $2,438.75.

Support levels: 2,410.80 2,400.00 2,388.25  

Resistance levels: 2,438.75 2,451.10 2,464.30