|

Gold Price Forecast: XAU/USD displays volatility contraction around $1,920 Fed policy hogs limelight

  • Gold price is showing volatility contraction as investors have mixed responses to Fed’s policy outlook.
  • The street believes that the reason behind deepening fears of the banking crisis is the Fed’s steepest and fastest rate hikes.
  • Gold price is auctioning in a Symmetrical Triangle chart pattern, which indicates a squeeze in volatility.

Gold price (XAU/USD) is demonstrating a sheer squeeze in volatility amid the puzzle for monetary policy outlook by the Federal Reserve (Fed), which will be announced next week. The policy puzzle is getting more confusing as First Republic Bank has come under scrutiny after the collapse of Silicon Valley Bank (SVB) and Signature Bank.

Federal Reserve executes its monetary policy through commercial banks, which are going through a rough phase and investors are worried that more burden of higher rates would lead to more banks’ debacles.

The street believes that the reason behind deepening fears of a banking crisis is the steepest and fastest interest rate hikes from the Fed. Therefore, the odds of an unchanged monetary policy have stemmed. However, the CME Fedwatch tool is showing mere 20% chances that Fed chair Jerome Powell would keep interest rates steady.

S&P500 futures are showing nominal losses in the Asian session after a super-bullish Thursday, however, the risk appetite is still solid. The US Dollar Index (DXY) continues to juggle around 104.40 as investors are awaiting the preliminary Michigan Consumer Sentiment Index (March) data. A steady number is anticipated at 67.0. Meanwhile, the return generated on the 10-year US Treasury bonds looks sticky at around 3.58%.

Gold technical analysis

Gold price is auctioning in a Symmetrical Triangle chart pattern on an hourly scale, which indicates a squeeze in volatility that is followed by an expansion in the same. The downward-sloping trendline of the aforementioned chart pattern is placed from March 15 high around $1,939.40 while the upward-sloping trendline is placed from March 16 low at $1,907.56.

Overlapping 20-period Exponential Moving Average (EMA) at $1,919.60 with the asset indicates a rangebound move.

Adding to that, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which indicates that investors are awaiting a potential trigger for further action.

Gold hourly chart

XAU/USD

Overview
Today last price1919.66
Today Daily Change0.15
Today Daily Change %0.01
Today daily open1919.51
 
Trends
Daily SMA201849.04
Daily SMA501877.18
Daily SMA1001820.71
Daily SMA2001776.37
 
Levels
Previous Daily High1933.51
Previous Daily Low1907.56
Previous Weekly High1870.09
Previous Weekly Low1809.46
Previous Monthly High1959.8
Previous Monthly Low1804.76
Daily Fibonacci 38.2%1923.6
Daily Fibonacci 61.8%1917.47
Daily Pivot Point S11906.88
Daily Pivot Point S21894.24
Daily Pivot Point S31880.93
Daily Pivot Point R11932.83
Daily Pivot Point R21946.14
Daily Pivot Point R31958.78

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

More from Sagar Dua
Share:

Editor's Picks

AUD/USD holds losses on unchanged PBOC rates

The Australian Dollar registers two days of consecutive gains versus the US Dollar, trading at 0.6980, up more than 0.50% as risk appetite improved, while the Aussie was supported by strong data on China’s GDP and Retail Sales.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold tumbles below $4,150 amid elevated US Treasury yields

Gold price falls to around $4,135 during the early Asian session on Tuesday. The precious metal extends its downside as US bond yields stayed elevated despite falling energy prices. Traders continue to assess the outlook for US interest rates ahead of next week’s Federal Reserve policy meeting.

Ethereum holds $2,400 as BitMine continues buying
Ethereum (ETH) trades near $2,400 on Monday, reversing a slight recovery from the early Asian session despite digital asset treasury firm BitMine Immersion (BMNR) scooping additional ETH tokens. The Las Vegas-based firm purchased 12,535 ETH last week, extending a weekly buying streak that stretches back to June 30, 2025.
Markets now see no hike in October, but inflation is still a major concern

US inflation has returned to the spotlight after the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed a significant acceleration in price pressures. The data raised concerns that the Federal Reserve may need to maintain restrictive monetary policy for longer, pushing interest-rate expectations higher and putting pressure on stocks and gold.

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.