Gold Price Analysis: XAU/USD steadily moves back to $1970 area, focus remains on FOMC


  • The prevalent selling bias around the USD assisted gold to regain traction on Wednesday.
  • The prevalent risk-on mood might keep a lid on any strong gains ahead of the Fed decision.

Gold edged higher through the early European session and was last seen trading near the top end of its daily range,  just below the $1970 level.

The precious metal managed to regain some positive traction on Wednesday and inched back closer to two-week tops set in the previous session. A softer tone surrounding the US dollar was seen as one of the key factors that benefitted the dollar-denominated commodity.

Adding to this, expectations of a dovish Fed and a modest slide in the US Treasury bond yields further drove some flows towards the non-yielding yellow metal. However, the prevalent risk-on sentiment could undermine the precious metal's safe-haven demand and cap the upside.

The global risk sentiment remained supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease. It is worth recalling that AstraZeneca resumed the phase-3 trials for its vaccine candidate and Pfizer announced the likelihood of presenting late-stage data for its own vaccine by late October.

From a technical perspective, the commodity on Tuesday failed to make it through the $1972 supply zone. This, in turn, further warrants some caution for bullish traders and positioning for any strong gains ahead of the latest FOMC monetary policy update.

The Fed is scheduled to announce its decision later during the US session and will also release its updated economic/inflation projections. The Fed is expected to maintain an accommodative approach to inflation and indicate to keep interest rates lower for longer.

Heading into the key central bank event, traders will take cues from the release of the US Monthly Retail Sales figures. The data might influence the USD price dynamics and produce some short-term trading opportunities during the early North American session.

Technical levels to watch

XAU/USD

Overview
Today last price 1967.04
Today Daily Change 12.81
Today Daily Change % 0.66
Today daily open 1954.23
 
Trends
Daily SMA20 1943.52
Daily SMA50 1926.25
Daily SMA100 1828.95
Daily SMA200 1707.49
 
Levels
Previous Daily High 1972.23
Previous Daily Low 1948.48
Previous Weekly High 1966.54
Previous Weekly Low 1906.62
Previous Monthly High 2075.32
Previous Monthly Low 1863.24
Daily Fibonacci 38.2% 1957.55
Daily Fibonacci 61.8% 1963.16
Daily Pivot Point S1 1944.4
Daily Pivot Point S2 1934.56
Daily Pivot Point S3 1920.65
Daily Pivot Point R1 1968.15
Daily Pivot Point R2 1982.06
Daily Pivot Point R3 1991.9

 

 

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