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.

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

 

 

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