XAU/USD Current price: $1,955.17
- More signs of easing United States inflation fuel optimism on Wednesday.
- The US Federal Reserve will announce its monetary policy decision, publish fresh projections.
- XAU/USD could react to Fed surprises but will hardly move if the central bank fails to impress.
XAU/USD holds on to modest intraday gains, trading within familiar levels in the $1,950 price zone. Investors’ mood improved these days, following United States (US) inflation-related figures supporting a dovish Federal Reserve (Fed). On the one hand, the Consumer Price Index (CPI) rose at a slower-than-anticipated pace in May, up by a modest 0.1% MoM in May. On the other, the Producer Price Index (PPI) contracted by 0.3% in the same month. The soft numbers somehow confirm price pressures are on the downward path and that the aggressive monetary policy adopted by the Fed in March 2022 is paying off.
In such a scenario, the expected end of the monetary tightening cycle seems logical, despite signs the labor market remains tight, which may end up pushing inflation back higher. Nevertheless, considering the ongoing pressure on the financial system, United States policymakers have anticipated a more dovish approach and a meeting-by-meeting decision.
At this point, the Fed is expected to hold its fire this time. The central bank today will not only announce its monetary policy but also offer fresh economic projections in the form of a dot plot, which usually anticipates future rate movements. Furthermore, Chairman Jerome Powell will deliver a press conference to explain their decision. The focus, then, will be on the dot plot and potential rate cuts in the future, coupled with Powell’s view of the overall situation.
Financial markets are optimistic a more conservative Fed would help the economy dodge a recession. As a result, investors are looking for high-yielding assets and leaving XAU/USD aside for now. Nevertheless, if the Fed decides differently from what financial markets anticipate, some wild price action could be expected, with XAU/USD responding to the broad USD Dollar’s weakness/strength.
XAU/USD price short-term technical outlook
The daily chart for the XAU/USD pair shows it holds on to most of its intraday gains, although it is still below its weekly opening. It has continuously met buyers around a directionless 100 Simple Moving Average (SMA) at $1,941.60, while it bottomed at $1,932.00 in May, the levels to watch to the downside. At the same time, the pair is unable to advance beyond a mildly bullish 20 SMA, which loses its bearish strength. Finally, technical indicators turned higher, but remain within neutral levels, falling short of anticipating another leg north.
The near-term picture is neutral-to-bearish. The 4-hour chart shows that XAU/USD develops below its 100 and 200 SMAs while hovering around a bearish 20 SMA. At the same time, the Momentum indicator heads marginally lower below its midline, while the Relative Strength Index (RSI) indicator remains directionless around its 50 line, reflecting the absence of speculative interest. Gold has a solid static resistance level at $1,966.20, the 23.6% retracement of the latest daily decline.
Support levels: 1,941.60 1,932.00 1,918.70
Resistance levels: 1.966.20 1,972.00 1,987.65
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
Editors’ Picks
AUD/USD stays defensive below 0.6650 amid China worries
AUD/USD seems vulnerable below 0.6650 in Asian trading on Tuesday, undermined by mounting worries over China's economic slowdown. The Aussie shrugs off small rate cuts by the PBOC and a subdued US Dollar. Pre-US earnings results caution also weighs on the pair.
USD/JPY keeps losses below 157.00, as risk-off mood returns
USD/JPY remains under pressure below 157.00 early Tuesday. The Japanese Yen stays bid as risk-off flows return in the Asian session, sustaining the US Dollar weakness-driven downside in the pair. The pair looks to Japanese verbal intervention and mid-tier US data.
Gold price moves away from over one-week low, climbs back above $2,400 mark
Gold price extended its recent corrective slide from the record high touched last week and fell to a more than one-week trough on Monday. US President Joe Biden's withdrawal from the 2024 Presidential election increased the chances of Donald Trump becoming the next US President, raising hopes of a looser regulatory environment.
This week could be explosive for ETH: Ethereum ETFs to debut in the US on Tuesday
Ethereum is down nearly 1% on Monday as the SEC confirmed via its website on Tuesday that it has given the final approval for spot ETH ETFs. Considering the ETH ETF launch and the upcoming Bitcoin Conference, this week could prove crucial for Ethereum.
Earnings review
In recent years, the focus has been on the Magnificent 7, particularly Nvidia’s monster earnings reports, which have dominated the market. While Nvidia’s results are still extremely important for overall sentiment, there is a hope that sales growth and revenues can pick up across a broad range of global markets and sectors.