XAU/USD outlook: Gold takes a breather under new record high ahead of Fed rate decision

Slobodan Drvenica Windsor Brokers

XAU/USD

Gold price edged lower in European trading on Tuesday as bulls take a breather after hitting new record high on bullish acceleration in past three days.

Overbought daily studies contribute to a partial profit taking, but dips are likely to be shallow and positioning for fresh push higher in anticipation that Fed will cut interest rates on the policy meeting which concludes on Wednesday.

Markets are likely to reduce speed and hold in quiet mode, expecting Fed’s verdict.

Fresh rise in expectations that US policymakers will opt for more aggressive 50 basis points rate cut adds to strong bullish sentiment and favors scenario of fresh longs on shallow dips for attack at psychological $2600 and possible extension higher.

Initial supports lay at $2560/55 zone guarding more significant $2533/31 supports (10DMA / former all-time high) which should contain deeper pullback.

Res: 2589; 2600; 2614; 2628.
Sup: 2561; 2556; 2531; 2520.

Interested in XAU/USD technicals? Check out the key levels

1. R3 2603.93
2. R2 2596.81
3. R1 2589.7
PP 2582.58
1. S1 2575.47
2. S2 2568.35
3. S3 2561.24

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD off tops, back to 1.1400

EUR/USD now loses some momentum and recedes from the area of recent daily tops, revisiting the 1.1400 neighbourhood in the latter part of Tuesday session. The pair’s daily decline comes in response to the resurgence of some buying interest in the US Dollar.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.