- Gold remains confined in a narrow trading band below the $1740-42 heavy supply zone.
- Investors now seemed reluctant as the focus remains on the critical FOMC policy decision.
- Mixed oscillators on hourly/daily charts warrant caution before placing directional bets.
Gold extended its sideways consolidative price action and remained confined in a narrow trading band, above the $1730 level through the early European session. Investors seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of Wednesday’s key event risk – the FOMC policy decision.
From a technical perspective, the XAU/USD pair has been struggling to capitalize on its recent recovery from multi-month lows and the upside remained capped near the $1740-42 supply zone. The mentioned region coincides with an over one-month-old descending trend-line and should now act as a key pivotal point for short-term traders.
Meanwhile, technical indicators on hourly charts have been gaining positive momentum and support prospects for some intraday gains. That said, oscillators on the daily chart – though have been recovering from the negative territory – are yet to confirm a bullish bias and warrant caution before positioning for any meaningful upside.
This, in turn, makes it prudent to wait for a sustained break through the $1740-42 confluence barrier in order to confirm that the XAU/USD has bottomed out in the near-term. Some follow-through buying will set the stage for a move towards challenging a strong horizontal support breakpoint, now turned resistance near the $1760-65 region.
On the flip side, immediate support is pegged near the $1725-24 region, marking 100-hour SMA. This is followed by an over one-week-old ascending trend-line, around the $1718 region and the $1700 mark. A convincing break below will be seen as a fresh trigger for bearish traders and turn the XAU/USD vulnerable to slide further.
The next relevant target on the downside will be multi-month lows, around the $1677-76 region, below which the XAU/USD is likely to accelerate the fall further. The downward trajectory might then drag the commodity towards the $1625-20 region with some intermediate support near the $1660-50 area.
XAU/USD 4-hourly chart
Technical levels to watch
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