Gold Price Forecast: XAU/USD near weekly lows ahead of Fed

XAU/USD Current price: $2,637.81

• Federal Reserve expected to trim benchmark rate by 25 bps, offer a glance into 2025.
• The US Dollar holds near its recent weekly highs against most major rivals.
• XAU/USD is technically bearish in the near term, aims to pierce the weekly low at $2,633.

Speculative interest holds its breath on Wednesday, resulting in little action across the FX board. Investors await the Federal Reserve’s (Fed) monetary policy announcement as the central bank ends its two-day meeting. United States (US) policymakers are expected to cut the main interest rate by 25 basis points (bps) and share their views on key macroeconomic indicators and the future of monetary policy through the Summary of Economic Projections (SEP) or dot-plot.

Finally, Chairman Jerome Powell will offer a press conference. Market players will be looking for clues on upcoming decisions, while Powell will do as usual and pour cold water on any speculation that can disrupt the market’s behaviour.

Generally speaking, the US Dollar (USD) is strong across the FX board, trading near its weekly highs against most major rivals. The basic idea of the market reaction following the aforementioned events is whether the outcome is dovish or hawkish. A hawkish central bank tends to translate into a stronger local currency, while the opposite scenario is also valid, with a dovish stance resulting in a weaker currency. Things, however, are never that straightforward.

The Fed is expected to cut rates (dovish) while delivering a hawkish message. The hawkish cut is priced in, and the market will react to 2025 expectations.

XAU/USD short-term technical outlook

Technically,  the daily chart for the XAU/USD pair shows the pair is down for a second consecutive day, although it is holding above the weekly low set at $2,633. In the same chart, a flat 20 Simple Moving Average (SMA) provides dynamic resistance at around $2,655. The 100 and 200 SMAs keep heading higher, well below the current level, limiting the long-term bearish potential. Finally, technical indicators are neutral-to-bearish, developing around their midlines and failing to provide clear directional clues.

The 4-hour chart shows that the risk skews to the downside. The XAU/USD pair trades below all its moving averages, while the 20 SMA is heading firmly lower after crossing below directionless 100 and 200 SMAs. At the same time, technical indicators gain downward traction within negative levels, supporting a fresh leg lower beyond the $2,633 weekly low.

 Support levels: 2,633.00 2,617.90 2,603.15

Resistance levels: 2,643.40 2,657.30, 2,672.70