Gold Price Forecast: XAU/USD waiting for the FOMC for direction

Valeria Bednarik FXStreet

XAU/USD Current price: 1,981.7

Gold prices hover within familiar levels ahead of the US Federal Reserve’s decision.
The United States central bank is widely anticipated to stay pat for a third consecutive meeting.
XAU/USD at risk of extending its slump after posting a fresh weekly low.

Gold prices see no action on Wednesday, with XAU/USD still stuck around $1,980.00. Financial markets are in wait-and-see mode ahead of the Federal Reserve (Fed) monetary policy announcement, the last one for 2023. Back in September, the Summary of Economic Projections (SEP) or dot plot, indicated that officials were still anticipating a terminal rate higher than the current 5.25%-5.50% interest rate. Still, policymakers refrained from hiking rates in the last two meetings, and the odds for a rate hike today are pretty much null.

Speculative interest has long ago started priced in the end of monetary tightening, ignoring officials´ warnings against it. Furthermore, investors are pricing in multiple rate cuts for 2024, starting as soon as Q2. The SEP will then determine the direction of the US dollar, as the document may shed some light on what policymakers think could happen in the next couple of years.

Additionally, Chair Jerome Powell will offer a press conference in which he will explain the Federal Open Market Committee (FOMC) decision. Powell’s words will also be scrutinized for hints on future actions. The US Dollar will likely react to the market’s sentiment, falling if investors turn optimistic and opt for high-yielding assets.

XAU/USD short-term technical outlook

XAU/USD is little changed for a second consecutive day, although it posted a lower low and a lower high on Wednesday. The daily chart shows that the pair extended its weekly decline to $1,973.00, the immediate support level. The pair develops midway between a mildly bullish 20 Simple Moving Average (SMA) at around $2,010 and directionless 100 and 200 SMAs, over $ 40 below the current level. Finally, technical indicators head nowhere just below their midlines, reflecting the absence of speculative interest.

Technical readings in the 4-hour chart favor a downward extension. XAU/USD develops below all its moving averages, with the 20 SMA heading firmly south after crossing below the longer ones. Meanwhile, technical indicators remain below their midlines with uneven slopes, although also reflecting absent directional interest.

Support levels: 1,973.00 1,959.40 1,946.00

Resistance levels: 1,994.40 2,001.70 2,014.20

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.

AUD/USD consolidates above 0.7000 as RBA hike bets support amid softer USD

AUD/USD steadies above 0.7000 in Friday’s Asian session, stalling the overnight pullback from a one-month top as RBA rate-hike expectations act as a tailwind for the Aussie. Moreover, the US Dollar remains on the back foot amid hopes of Iran diplomacy, further supporting the currency pair. However, geopolitical risks and hawkish Fed expectations limit USD losses.

USD/JPY flatlines near 157.70 after hot Tokyo CPI as focus remains on BoJ

USD/JPY consolidates around 157.70 during the Asian session on Friday, moving little following the release of hot Tokyo CPI as focus remains on the highly anticipated BoJ rate decision. Meanwhile, upside remains capped as the US Dollar stays depressed amid the Euro's post-ECB rise. However, Thursday's US macro data reaffirmed Fed hike bets, which, along with geopolitical uncertainties, support the buck and the currency pair.

Gold falls to near $4,000 as US PCE data reinforces December Fed hike odds

Gold price falls to around $4,015 during the early Asian session on Friday. The precious metal loses ground as US inflation data reinforced expectations ‌of a Federal Reserve interest rate hike later this year.

Bank of Japan to leave interest rates steady at 1.25%

The Bank of Japan is set to announce its monetary policy decision on Friday at around 02:30 GMT. Like the Federal Reserve, financial markets are confident that the BoJ will leave interest rates unchanged, after raising them by 25 basis points to 1.25% in the September policy meeting. This is the highest interest rate level seen in 31 years in Japan.

Ethereum dips as US PCE inflation reinforces December rate hike

Ethereum fell below $2,300, down 4.8% on Thursday following a rise in US Personal Consumption Expenditure inflation. The PCE Price Index climbed 0.5% MoM and 3.6% YoY in September, matching market forecasts. Core PCE, which excludes volatile energy and food prices, increased by 0.3% monthly and 3.1% yearly, also in line with expectations.

A hot US economy is supposed to sink Gold. It didn't. Here's why

Gold (XAU/USD) remains under pressure near $4,000, as stronger-than-expected United States (US) economic data reinforce expectations of another Federal Reserve (Fed) interest rate hike in December. Economic growth is accelerating, inflation remains elevated, and borrowing costs could rise further.