Gold Price Forecast: XAU/USD retakes key $4,075 resistance ahead of Fed Minutes, NFP
- Gold price rebound holds below $4,100 as sellers return early Wednesday.
- US Dollar sits at weekly highs amid risk recovery, ahead of FOMC Minutes.
- Gold recaptures 21-day SMA on Tuesday; the daily RSI swings back into the bullish zone.
Gold is consolidating below $4,100 in early Wednesday’s trades, as buyers take a breather after the previous solid rebound and ahead of the Minutes of the US Federal Reserve (Fed) October monetary policy meeting due later in the day.
The critical September Nonfarm Payrolls (NFP) report for Thursday also remains on traders’ radars.
Gold awaits cues on Fed’s next move
Gold staged a solid comeback on Wednesday, ending its three-day decline, as global market sell-off revived the safe-haven demand for the traditional store of value.
Concerns over the AI-driven overvaluation in the technology sector combined with dismal US jobs data triggered a risk-aversion wave across the financial markets.
Data published by the Labor Department on Tuesday showed that the number of Americans on jobless benefits surged between mid-September and mid-October. Meanwhile, A report from ADP showed private employers lost an average of 2,500 jobs a week during the four weeks ending November 1.
Markets also remained unnerved ahead of the key quarterly earnings from chipmaker Nvidia due after market hours on Wednesday.
However, risk sentiment appears to be improving early Wednesday, putting a cap on the US Dollar (USD) upside. The USD struggles with its recent recovery, allowing Gold to head back toward the $4,100.
The next of note for Gold traders remains the Fed Minutes, which is expected to show that the Fed policymakers stay broadly divided on the rate outlook, leaning to caution on further easing, while awaiting the delayed US economic data.
The Fed Minutes could check the Gold price rebound as chances of a December rate cut remain at coin flip’s level, according to the CME Group’s FedWatch Tool.
Additional cues on the timing of the Fed’s next rate reduction will also be awaited from the September NFP data, with economists expecting the US economy to have added 50,000 jobs against a 22,000 job creation in August.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,074.30. The 21-, 50-, 100- and 200-day Simple Moving Averages (SMAs) rise. The 21-day has flattened near price, while Gold holds above all of them, preserving a bullish bias. The Relative Strength Index (RSI) stands at 52.91, neutral with a slight uptick. Measured from the $4,381.17 high to the $3,885.84 low, the 38.2% retracement at $4,075.05 caps the advance. A sustained break would open the 50% retracement at $4,133.50.
Holding above the 21-day SMA at $4,048.49 would keep the near-term tone supported, while the 50-day SMA at $3,964.17 marks a lower shield. If bulls push through overhead resistance, the 61.8% retracement at $4,191.95 emerges as the next target. Failure to clear resistance would leave the metal consolidating within the moving-average band.
(The technical analysis of this story was written with the help of an AI tool)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
