Gold Price Forecast: XAU/USD climbs to three-day tops, upside seems limited ahead of Fed

Gold built on the previous day's goodish bounce from the $1,742 area, or the lowest level since August 12 and gained some follow-through positive traction on Tuesday. The momentum pushed the XAU/USD to three-day tops, around the $1,775 region during the early North American session and was exclusively sponsored by a modest US dollar weakness. In fact, the key USD Index retreated further from over one-month tops touched on Monday and provided a modest lift to dollar-denominated commodities, including gold.

Apart from this, worries about contagion from China Evergrande's debt crisis, the fast-spreading Delta variant and a global economic slowdown extended some support to the safe-haven precious metal. That said, a combination of factors might hold traders from placing aggressive bullish bets and keep a lid on any runaway rally for the XAU/USD. The global equity markets made a solid comeback following the previous day's selloff. This, along with a goodish intraday bounce in the US Treasury bond yields, might act as a headwind for gold.

Moreover, firming expectations for an imminent Fed taper announcement should further collaborate towards capping the upside for the non-yielding yellow metal. Despite signs of easing inflationary pressures in the US, the incoming macro data pointed to the continuation of the economic recovery. This, in turn, has been fueling speculations that the Fed would begin rolling back its massive pandemic-era stimulus sooner rather than later. Hence, the most important event for gold prices will be the outcome of the FOMC meeting starting this Tuesday.

The Fed is scheduled to announce its decision on Wednesday and investors will look for fresh clues about the likely timing of the Fed's tapering plan. Apart from this, the latest economic projections, especially the so-called dot plot will play a key role in determining the next leg of a directional move for gold. This makes it prudent to wait for a strong follow-through buying before confirming that the XAU/USD has bottomed out in the near term and positioning for any further gains.

Technical outlook

From a technical perspective, a subsequent move up is more likely to confront stiff resistance near the $1,775-76 region. This is closely followed by a strong horizontal support breakpoint, around the $1,780 level, above which the commodity seems all set to climb further and reclaim the $1,800 round figure.

On the flip side, the daily swing lows, around the $1,758 region, now seems to protect the immediate downside ahead of the $1,752-50 area. Sustained weakness below will be seen as a fresh trigger for bearish traders and turn the XAU/USD vulnerable. The next relevant support is pegged near the $1,729-28 zone, below which bears could aim to challenge the $1,700 mark.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD remains vulnerable near 1.1600 amid firmer dollar

EUR/USD is hovering around 1.1600, on the defensive amid a broadly stronger US dollar. Markets cheer US-Sino talks and stimulus progress despite looming inflation fears. The Fed-ECB monetary policy divergence weighs down on the euro. US Consumer Confidence data awaited.


GBP/USD hovers around 1.3750, Brexit talks in London eyed

GBP/USD is trading above 1.3750, struggling for a clear direction after Monday’s rebound. Market sentiment improves on stimulus hopes, US-Sino talks but the dollar remains firmer. UK’s Frost offers EU December deadline to solve the row over the NI proposal. All eyes on the Brexit talks in London.


Acceptance above 100/200-day SMAs favours XAU/USD bulls

Gold regained positive traction on Monday and inched back closer to multi-week tops. Fresh COVID-19 jitters benefitted the safe-haven metal. A stronger USD, hawkish central bank outlooks kept a lid on any meaningful upside.

Gold News

Traders book profits from Shiba Inu to push Dogecoin to $0.34

Dogecoin price could see some incoming speculative money from profit-taking in Shiba Inu A bullish close above the Cloud on the daily chart indicates future upswing likely. The outperformance of Shiba Inu is likely as Dogecoin lags the majority of the market.

Read more

Conference Board Consumer Confidence October Preview: Watch what we do... Premium

Confidence expected to slip to 108.3 from 109.3 in September. Michigan Consumer Sentiment eroded slightly in October. Sentiment seems divorced from labor market and Retail Sales. Federal Reserve taper will not hinge on a happy US consumer.

Read more