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XAU/USD Price forecast: Gold bounces on poor US data

XAU/USD Current price: $ 4,038

  • Oil prices continue to retreat as the pause in the Middle East extends.
  • The Federal Reserve will announce its decision on monetary policy on Wednesday.
  • XAU/USD bounced from near $4,000, holds depressed within familiar levels.

Spot Gold approached the $4,000 threshold on Tuesday, easing for a second consecutive day after starting the week with a bullish gap. The XAU/USD pair traded as high as $4,116 on Monday, as a pause in back-and-forth attacks between the United States (US) and Iran weighed on Oil prices and the US Dollar (USD).

However, the Greenback quickly recovered its bullish poise, despite the continued pause in the Middle East, helped by hawkish bets ahead of the Federal Reserve (Fed) monetary policy announcement. Fed officials will announce their decision on Wednesday, and market players anticipate they will leave the benchmark interest rate unchanged at 3.50% - 3.75%. However, investors also anticipate a hawkish tone from Chair Kevin Warsh and co.

Warsh made a case for taking decisions based on data, and the latest United States (US) data has been encouraging, as inflation in the country rose by less than anticipated in June, despite still holding well above the Fed’s 2% goal. The decline was a result of the reopening of the Strait of Hormuz, resulting in plummeting Oil prices, the main factor pushing inflation higher. Hopes, however, were diluted after Iran and the US resumed tit-for-tat attacks in mid-July, dropping the Memorandum of Understanding (MoU).

Indeed, Oil prices are back in retreat mode amid a new halt in hostilities and attempts to resume negotiations. But the war is far from over and peace quite an unlikely achievement.

The Greenback came under selling pressure in the second half of the day, following the release of soft American data. Private-sector hiring in the US declined, according to the NER Pulse report, which showed that companies added an average of 15K jobs per week in the four weeks ending July 11. Also, the CB Consumer Confidence index shrank to 90.8 in July from an upwardly revised 92.2 in June. The figures helped XAU/USD bounce towards the current $4,030 price zone.

XAU/USD short-term technical outlook

Chart Analysis XAU/USD

In the four-hour chart, XAU/USD holds to a bearish bias as it remains capped beneath the short- and medium-term moving averages. Price sits under both the 20-period Simple Moving Average (SMA) at $4,061.52 and the 100-period SMA at $4,066.90, while also trading below the longer-term 200-period SMA at $4,106.37, which hints at a corrective phase within a broader constructive backdrop. Momentum is negative, and the Relative Strength Index (RSI) indicator near 43 leans slightly to the downside, suggesting sellers retain control in the short term despite the proximity of deeper trend support.

The daily chart shows that XAU/USD remains under clear downside pressure as spot holds below the short-term 20-day SMA at $4,073.07, while the longer-term 100-day and 200-day SMAs at $4,458.32 and $4,492.52 stay well overhead, reinforcing a bearish bias. Momentum readings back this tone, with the 14-day Momentum indicator in negative territory and the Relative Strength Index (RSI) hovering near 44, suggesting lackluster buying interest and scope for further corrective weakness while these hurdles cap the topside.

On the topside, initial resistance is aligned at the 20-period SMA around $4,061.52, with the 100-period SMA at $4,066.90 following closely above as a secondary barrier that would need to be reclaimed to ease immediate downside pressure. Next comes the O 200-period SMA near $4,106.37, followed by the weekly high at $4,116. The $4,000 mark comes as immediate support ahead of the monthly low at $3,941, with a break below the latter opening the door for a steeper decline.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Author

Valeria Bednarik

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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