Gold Price Forecast: Further advances depend on the Fed

Valeria Bednarik FXStreet

XAU/USD Current price: $1,776.53

A better market mood put pressure on the American currency.
The US Federal Reserve will announce its monetary policy decision on Wednesday.
Gold advanced for a second day in a row, but additional gains are at doubt.

Gold prices advanced for a second consecutive day, trimming half of the previous week losses. The bright metal benefited from decreased demand for the American currency amid a better market mood that also pushed global equities into positive territory, although Wall Street is still far from making up Monday’s losses.

Investors moved away from the greenback as fears receded and as the US Federal Reserve kick-started its two-day meeting on monetary policy. The central bank will announce its decision with fresh economic projections on Wednesday, and some market participants still expect hints on tapering. The possible timeline is critical as if policymakers decide to start trimming its stimulus program before year-end, XAU/USD could take a turn for the worse.

Gold price short-term technical outlook

Spot gold hit a daily high of $1,781.75 a troy ounce, currently trading at around 1,775. XAU/USD stands above the 61.8% retracement of the March/June rally, the immediate support level at 1,769.10. The daily chart shows that the pair remains below all of its moving averages, with the 20 SMA heading south below the longer ones and around the next Fibonacci level. Meanwhile, technical indicators have recovered but remain within negative levels, indicating limited buying interest.

In the near term, and according to the 4-hour chart, the risk is skewed to the upside, although the bullish potential is limited. The metal has advanced beyond its 20 SMA, which now turned flat, but remains below the 100 and 200 SMAs, which maintain their bearish slopes. The Momentum indicator turned flat after crossing into positive territory, offering a neutral stance, while the RSI indicator advances at around 56. Bulls will have better chances if gold surpasses 1,785.40, the immediate resistance level.

Support levels: 1,769.10 1,754.20 1,742.00

Resistance levels: 1,785.40 1,796.90 1,806.70

View Live Chart for the XAU/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.