Gold Price Forecast: XAU/USD drops post refreshing all-time-high near $2,080 as Fed signals a pause ahead

Gold price has displayed some correction after posting a fresh YTD high at $2,079.76.
The Fed announced that further monetary policy decisions would be highly dependent on incoming data.
Investors are worried that US labor market conditions are still tight and could accelerate persistent inflation.

Sagar Dua FXStreet

Gold price (XAU/USD) has witnessed a steep fall after printing a fresh year-to-date (YTD) high placed at $2,067.00 in the early Asian session. The yellow metal has attracted significant offers as the US Dollar Index (DXY) has attempted a recovery. Earlier, the precious metal gained immense strength as the Federal Reserve (Fed) signaled a pause in the policy-tightening spell from June after hiking interest rates by 25 basis points (bps) to 5.00-5.25%.

Fed chair Jerome Powell announced that further monetary policy decisions would be highly dependent on incoming data. The Fed is moving from its prior language of ‘some additional policy firmly’ to ‘closely monitoring incoming information’ suggesting that monetary policy is restrictive enough for now to curb sticky inflation.

Meanwhile, S&P500 futures settled Wednesday’s session on a bearish note after surrendering stellar gains amid uncertainty over the further path of arresting sticky inflation, portraying a risk-aversion theme.

The US Dollar Index (DXY) is showing signs of recovery after a steep correction to near 101.26. Investors are worried that the United States labor market conditions are still tight and could accelerate persistent inflation.

On Wednesday, the US Automatic Data Processing (ADP) agency showed an addition of fresh payrolls at 296K vs. the estimates of 150K and the former release of 145K. If incoming information continues to remain expansionary in this way, the Fed won’t have another option than to hike interest rates further.

Gold technical analysis

Gold price has sensed selling pressure after printing a fresh YTD at $2,079.76 as profit-booking kicked in. The precious metal has conquered its prior resistance plotted from 07 August 2020 high at $2,075.22. Intermediate support is placed from April 21 low at $1,969.29.

The 10-period Exponential Moving Average (EMA) at $1,973.73 is providing cushion to the Gold bulls.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, indicating a continuation of the upside momentum.

Gold weekly chart

XAU/USD

Overview
Today last price	2050.44
Today Daily Change	33.77
Today Daily Change %	1.67
Today daily open	2016.67

Trends
Daily SMA20	2001.95
Daily SMA50	1940.31
Daily SMA100	1901.75
Daily SMA200	1810.17

Levels
Previous Daily High	2019.43
Previous Daily Low	1978.51
Previous Weekly High	2009.41
Previous Weekly Low	1974.13
Previous Monthly High	2048.75
Previous Monthly Low	1949.83
Daily Fibonacci 38.2%	2003.8
Daily Fibonacci 61.8%	1994.14
Daily Pivot Point S1	1990.31
Daily Pivot Point S2	1963.95
Daily Pivot Point S3	1949.39
Daily Pivot Point R1	2031.23
Daily Pivot Point R2	2045.79
Daily Pivot Point R3	2072.15

Author

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.

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Gold is struggling to capitalize on a weaker US Dollar, 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.

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