Gold Price Forecast: Next target on the downside for XAU/USD is located at $1,730

XAU/USD struggled to stage a convincing rebound ahead of the weekend and closed the second straight week in the negative territory, losing nearly 2%. Gold has more room on the downside heading into the Fed showdown, FXStreet’s Eren Sengezer briefs.

XAU/USD bears in driver's seat as focus shifts to FOMC

“On Wednesday, the Federal Reserve will announce monetary policy decisions alongside the updated Summary of Projections following the FOMC’s two-day meeting. In case Powell unveils that the Fed will start reducing asset purchases before the end of the year, the USD is likely to gather strength and force XAU/USD to turn south. On the other hand, a dovish outlook with the chairman refraining from delivering a tapering timeline could trigger a heavy USD selloff and fuel a gold rally.”

“A daily close below $1,750 (static level) could open the door for additional losses toward $1,730 (static level) and $1,720 (static level). However, in case the RSI breaks below 30 with such a move, there could be a technical correction before the next leg down.”

“Unless XAU/USD makes a daily close above $1,810, where the critical 200-day SMA is located, buyers are unlikely to dominate gold's action. Ahead of that level, $1,770 (Fibonacci 61.8% retracement of April-June uptrend) and $1,800 (psychological level) align as interim resistances.”