Gold Price Forecast: XAU/USD under pressure as the US Dollar recovers its poise

Valeria Bednarik FXStreet

XAU/USD Current price: $1,924.55

Softer-than-expected growth in the services sector across the globe undermined the mood.
FOMC Meeting Minutes may shed light on upcoming Federal Reserve decisions.
XAU/USD is unable to retain intraday gains, somehow discouraging for bulls.

Gold prices came under pressure in the second half of Wednesday, with XAU/USD currently trading at around $1,924 after peaking earlier in the day at $1,934.99 a troy ounce, a fresh weekly high. A deteriorated market sentiment boosted US Dollar demand ahead of the Federal Open Market Committee (FOMC) Meeting Minutes.

In the absence of relevant news and ahead of first-tier data, market players put their eyes on China. Beijing announced that starting August 1 will restrict exports of metals critical for the chip industry. Tensions between the country and the United States (US) arose when US Treasury Secretary Janet Yellen is visiting Beijing.

Market concerns also rotated around softer-than-expected growth in the services sector. S&P Global, alongside local institutions, released the final estimates of its June Services PMIs, most of which suffered downward revisions. China, Australia, and the Eurozone were among those that saw the figures downgraded.

Meanwhile, the Federal Open Market Committee (FOMC) is about to release the Minutes of the latest meeting in which the Federal Reserve (Fed) decided to maintain the Fund Rate unchanged at 5.00/25%. Market players were anticipating the end of the monetary tightening cycle. Yet, policymakers left the door open for more than one rate hike coming, as officials signaled rates might go to 5.6% by year-end.

Given the ruling sour mood, the more hawkish the Fed, the more the chances of further US Dollar gains.

XAU/USD price short-term technical outlook

XAU/USD daily chart shows that the pair retreated after testing a bearish 20 Simple Moving Average (SMA), which heads south below a flat 100 SMA. The 200 SMA retains its bullish slope far below the current level, while technical indicators offer neutral-to-bearish slopes within negative levels. Overall, the risk skews to the downside, although the case for a steeper decline will be firmer once Gold slides below the $1,890 price zone.

In the near term, the bearish case gains ground. In the 4-hour chart, XAU/USD met sellers around a bearish 100 SMA but resists above a bullish 20 SMA. In the meantime, technical indicators have continued to lose their upward strength within positive levels, currently approaching their midlines with modest downward slopes.

Support levels: 1,917.30 1,903.00 1,892.95

Resistance levels: 1,932.75 1,945.20 1,958.30

View Live Chart for XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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