June 21, 2024

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Gold Price Forecast: XAU/USD holds steady above $1,960, looks to FOMC for fresh impetus

3 min read
  • Gold price attracts some selling during the Asian session, though lacks follow-through/
  • The US Dollar holds steady near a two-week high and is weighing on the XAU/USD.
  • Looming recession risks help limit losses as traders keenly await the FOMC decision.

Gold price edges lower during the Asian session on Wednesday and erodes a part of the overnight goodish recovery gains from the $1,951-$1,952 area, or over a one-week low. The XAU/USD currently trades just above the $1,960 level, down 0.10% for the day, as traders keenly await the outcome of the highly-anticipated Federal Open Market Committee (FOMC) meeting before placing fresh directional bets.

Focus remains glued to FOMC decision

The Federal Reserve (Fed) is scheduled to announce its decision later this Wednesday and is widely expected to hike interest rates by 25 basis points (bps). Furthermore, the markets have been anticipating a potential end to the Fed’s current monetary tightening cycle, though investors remain sceptic if the central bank will commit to a more dovish stance. Hence, the focus will be on the accompanying monetary policy statement and Fed Chair Jerome Powell’s remarks at the post-meeting press conference, which will be closely scrutinized for cues about the future rate-hike path. The outlook, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and help determine the near-term trajectory for the non-yielding Gold price.

Modest US Dollar uptick weighs on Gold price

In the meantime, the upbeat macro data from the United States (USD) released on Tuesday, which pointed to signs of an extremely resilient economy, assists the USD to attract some buying and hold steady just below a two-week high. The survey from the Conference Board showed that US consumer confidence jumped to a two-year high in July in the wake of a persistently tight labour market and receding inflationary pressures. This, in turn, raises optimism that the economy could skip a recession this year and acts as a tailwind for the Greenback. Apart from this, hopes for more stimulus from China, along with the prevalent risk-on mood, exerts some downward pressure on the safe-haven Gold price and contributes to the modest intraday downtick.

A combination of factors limits losses for XAU/USD

That said, looming recession risks, the worsening US-China relations – the world’s two largest economies – and geopolitical risks should help limit losses for the precious metal. Worries about a deeper global economic downturn reignited on Monday following the disappointing release of the Purchasing Managers’ Index (PMI) prints for July. The survey showed a broad-based decline in business activity across the manufacturing and services sector in the Euro Zone, the United Kingdom (UK) and the United States (US). Traders might also refrain from placing aggressive bearish bets around the Gold price heading into the key central bank event risk, warranting caution before positioning for the resumption of the recent pullback from over a two-month high.

Gold price technical outlook

From a technical perspective, the overnight swing low, around the $1,952-$1,951 region, could protect the immediate downside ahead of the $1,946-$1,945 zone. Some follow-through selling, however, will suggest that the recent upward trajectory witnessed since the beginning of the current month has run its course and pave the way for deeper losses. The Gold price could then slide to the $1,934 horizontal support en route to the $1,926-$1,925 region. The next relevant support is pegged near the $1,909 area, below which the XAU/USD could weaken below the $1,900 mark and retest the multi-month low, around the $1,893-$1,892 area touched in June.

On the flip side, the $1,977-$1,978 area is likely to act as an immediate barrier. This is followed by the monthly peak, around the $1,987-$1,988 region set last week, above which the Gold price could aim to reclaim the $2,000 psychological mark. The upward trajectory could get extended further towards the next relevant hurdle near the $2,010-$2,012 supply zone.

Key levels to watch

XAU/USD

OVERVIEW
Today last price1963.56
Today Daily Change-1.36
Today Daily Change %-0.07
Today daily open1964.92
TRENDS
Daily SMA201941.28
Daily SMA501947.39
Daily SMA1001962.95
Daily SMA2001882.9
LEVELS
Previous Daily High1965.75
Previous Daily Low1952.08
Previous Weekly High1987.54
Previous Weekly Low1945.85
Previous Monthly High1983.5
Previous Monthly Low1893.01
Daily Fibonacci 38.2%1960.53
Daily Fibonacci 61.8%1957.3
Daily Pivot Point S11956.08
Daily Pivot Point S21947.25
Daily Pivot Point S31942.41
Daily Pivot Point R11969.75
Daily Pivot Point R21974.59
Daily Pivot Point R31983.42

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