Gold Price Forecast: XAU/USD claims $1,800 mark ahead of the Fed


Update: Gold prices hover in a familiar trading range of $1,795 and $1,805 on Wednesday. The US 10-year bond Treasury yields retreat to 1.23% as investors await the FOMC meeting for further clues on the Fed’s next move on interests rates and growth outlook. The higher interests rates and the Treasury yields are inversely correlated. Lower Treasury yields remain supportive of the gold prices. Further, the rapid increase of the coronavirus delta variant also affects the demand for the precious metal. China reflects the strong demand in the first half of the year and  India struggles with its COVID-19 pandemic, which weighs on the prices. The US Dollar remains steady just below the $93.00 mark, which makes the gold expansive for the other currencies holders.

 

Gold (XAU/USD) aptly repeats the pre-Fed trading lull, consolidates the previous day’s bounce in a tight range surrounding $1,800 amid the early Asian session on Wednesday. The yellow metal cheered the US dollar weakness to snap a two-day downtrend on Tuesday but the recently cautious sentiment seems to weigh on the commodity prices.

Mixed data, virus update keep markets worries

Although US Durable Goods Orders and housing numbers came in softer-than-expected for June and May respectively, the notable upward revision to the priors renewed bets that the Fed hawks have scope. Also on the same line could be the strong readings of US CB Consumer Confidence figures that jumped to the pre-pandemic levels, to 129.10 for July.

Elsewhere, the US Centers for Disease Control and Prevention (CDC) edits mask mandate and Australia’s key coronavirus infected state, New South Wales (NSW) is up for refreshing the 16-month high of the daily cases. Further, the UK reports the highest death toll since March 17 and offers another reason to be worried.

In addition to the mixed data and COVID-19 fears, China’s crackdown on technology and tuition stocks, as well as the Sino-American tussles, also weighs on the market’s mood.

Against this backdrop, Wall Street benchmarks snapped a five-day uptrend and the US 10-year Treasury yields also slipped 3.7 basis points (bps) to 1.23% by the press time.

Although the risk-off mood puts a safe-haven bid under the US dollar, bulls are cautious ahead of the key US Federal Open Market Committee (FOMC) verdict.

While inflation pressure remains the concern to press the Fed policymakers towards tapering, recently escalating Delta covid strain woes may stop Chairman Jerome Powell and Company to replay the old art of defending easy-money but keeps bulls on the edge.

Amid these plays, Westpac said, “Policy is set to remain on hold at the July FOMC meeting, but we will be looking for additional guidance on the Committee’s perception of the outlook and the balance of risks, and any discussion of the pace of asset purchases. The statement should continue to refer to inflationary pressures as transitory. Fed Chair Powell will deliver the post-meeting press conference at 04:30 AEST.”

Read: Federal Reserve Preview: Three reasons why Powell could pause, pummeling the dollar

Technical analysis

100-DMA defends gold buyers and so does the upbeat Momentum line but the receding bullish bias of the MACD histogram indicates challenges for the buyers on the way ahead.

Also testing the gold optimists is a horizontal line from early May and 200-DMA, close to $1,815 and $1,821 in that order.

It’s worth mentioning that the monthly high near $1,835 and May 10 peak around $1,845 offer extra hurdles to the north.

Hence, a bumpy road to the north tests the gold’s upside whereas the alternative path has fewer blocks, namely 100-DMA and an ascending trend line from March-end, respectively around $1,799 and $1,775.

In a case where the gold prices drop below $1,775, June’s low surrounding $1,750 should return to the chart.

Gold: Daily chart

Trend: Pullback expected

Additional important levels

Overview
Today last price 1799.4
Today Daily Change 1.74
Today Daily Change % 0.10%
Today daily open 1797.66
 
Trends
Daily SMA20 1800.64
Daily SMA50 1833.41
Daily SMA100 1797.04
Daily SMA200 1822.82
 
Levels
Previous Daily High 1811.55
Previous Daily Low 1796.42
Previous Weekly High 1825.04
Previous Weekly Low 1789.8
Previous Monthly High 1916.62
Previous Monthly Low 1750.77
Daily Fibonacci 38.2% 1802.2
Daily Fibonacci 61.8% 1805.77
Daily Pivot Point S1 1792.2
Daily Pivot Point S2 1786.75
Daily Pivot Point S3 1777.07
Daily Pivot Point R1 1807.33
Daily Pivot Point R2 1817.01
Daily Pivot Point R3 1822.46

 

 

Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

EUR/USD extends recovery toward 1.0750

EUR/USD extends recovery toward 1.0750

EUR/USD preserves its recovery momentum and edges higher toward 1.0750 on Monday, after closing the previous week in negative territory. The improving risk mood makes it difficult for the US Dollar to find demand and helps the pair stretch higher.

EUR/USD News

GBP/USD rises toward 1.2700 on renewed USD weakness

GBP/USD rises toward 1.2700 on renewed USD weakness

GBP/USD trades in the green near 1.2700 in the second half of the day on Monday. After outperforming its rivals on upbeat PMI data on Friday, the US Dollar stays on the back foot amid a positive shift in risk sentiment, allowing the pair to extend its rebound.

GBP/USD News

Gold clings to modest daily gains near $2,330

Gold clings to modest daily gains near $2,330

After a quiet European session, Gold edges higher toward $2,330. Following Friday's sharp decline, XAU/USD manages to hold its ground as the benchmark 10-year US Treasury bond yield struggles to push higher, while the USD weakens on upbeat market mood.

Gold News

Week ahead: Bitcoin dips under $63,000, meme coins fade with steep correction in top five

Week ahead: Bitcoin dips under $63,000, meme coins fade with steep correction in top five

Bitcoin dipped under $63,000 on Monday, lowering crypto market capitalization by over 3%, per CoinGecko data. BTC is in a state of decline, and news of VanEck’s Spot Bitcoin ETF launch in Australia failed to improve traders' sentiment. 

Read more

Three things to watch this week: Key elections and inflation data

Three things to watch this week: Key elections and inflation data

 This week we have some key elections in France and the UK, and we get inflation data from the US and major European economies that will determine the course of interest rates in the coming months.

Read more

Forex MAJORS

Cryptocurrencies

Signatures