Gold Price Forecast: XAU/USD retreats from fresh records, hovers around $2,650

XAU/USD Current price: $2,653.99

• Geopolitical tensions undermined the market mood and helped the US Dollar.
• The focus remains on the United States inflation update scheduled for Friday.
• XAU/USD eased from fresh highs, but its bearish potential remains limited.

Spot Gold positive bias continued on Wednesday, as the bright metal traded as high as $2,670.43 a troy ounce. The XAU/USD pair retreated as the US Dollar gathered momentum within American trading hours, firmly up against most major rivals. Gold, however, remains resilient due to its safe-haven conditions, as Wall Street turned red, with the Dow Jones Industrial Average losing over 240 points at the time of writing.

The sentiment deteriorated rapidly by the end of the European session, helped by escalating geopolitical concerns. On the one hand, United States (US) President Joe Biden said that an all-out war is possible in the Middle East, but there is also the possibility of a settlement. Meanwhile, Russian President Vladimir Putin threatened once again with the use of nuclear weapons.

At the same time, the Organization for Economic Cooperation and Development  (OECD) maintained the US growth forecast for 2024 at 3.6% but downwardly revised 2025 progress to 1.6% from 1.8% previously. Finally, higher US Treasury yields are helping the USD on its way up.

Data-wise, the macroeconomic calendar remained scarce. Speculative interest keeps waiting for the US Personal Consumption Expenditures (PCE) Price Index to be released on Friday. The Federal Reserve's (Fed) favorite inflation gauge is expected to show that price pressures continued to recede in August.

XAU/USD short-term technical outlook  

The daily chart for the XAU/USD pair shows it struggles around its opening and that a corrective decline is not out of the picture. Technical indicators retreated modestly but hold within overbought readings without downward strength. At the same time, the pair keeps developing above bullish moving averages, with the 20 Simple Moving Average (SMA) maintaining its firm upward slope over $100 below the current level.

The 4-hour chart shows XAU/USD entered a consolidative phase, while the risk of a downward extension seems limited. The 20 SMA keeps heading north at around $2,638, while the 100 and 200 SMAs extended their advances far below the shorter one. The Momentum indicator turned lower, although it holds far above its midline, while the Relative Strength Index (RSI) indicator turned flat at around 66, also suggesting absent selling interest.

Support levels: 2,652.60 2,638.10 2,623.25

Resistance levels: 2,670.00 2,685.00 2,700.00