XAU/USD moved sideways a little above $1,730 for the majority of the day on Wednesday but came in modest bearish pressure in the early American session. Fed’s dot plot is set to provide the next directional clue for gold, FXStreet’s Eren Sengezer reports.
See – Gold Price Analysis: XAU/USD to sink towards the $1,500 mark – Deutsche Bank
Key quotes
“The median forecast of FOMC’s policymakers was for rates to stay near zero through 2023 with only five of them seeing a liftoff in that year. If the publication later in the session reveals a hawkish shift in long-term rate expectations amid heightened concerns over a sharp increase in inflation, the USD could continue to gather strength and weigh on XAU/USD.”
“FOMC Chairman Jerome Powell could reassure markets that they will not react to temporary spikes in inflation and reiterate that they will continue to support the economic recovery until they reach the employment and inflation goals. However, Powell’s possible dovish comments are likely to limit USD’s gains temporarily if it’s not supported by economic projections.”
“The 20-day SMA, which is currently located near $1,740, is reinforcing the resistance area and if XAU/USD manages to clear that area, the next target could be seen at $1,767 (Fibonacci 50% retracement).”
“A daily close below $1,720 could open the door for additional losses toward $1,700 (psychological level).”
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