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  • Gold price forecast remains choppy as the metal maintains a narrow trading range of 1,801 – 1,773 level. 
  • The reduction of the stimulus by the Fed will require substantial progress in the job market, said Jerome Powell. 
  • Forex trading market participants may buy above the $1,773 level to target the $1,801 and $1,809 levels. 

Gold prices closed at $1789.25 after reaching a high of $1795.65 and a low of $1778.90. The XAU/USD prices remained mostly flat for the second consecutive session even after the Federal Reserve’s July meeting minutes. Gold price forecast remains choppy as the metal maintains a narrow trading range of 1,801 – 1,773 level. 

If you are interested in trading XAU/USD with forex robots, check out our guide.

The Fed FOMC meeting minutes suggested that most officials were inclined towards reducing the pace of bond purchases this year, given the progress in inflation and employment goals. The US Dollar Index (DXY) that measures the greenback’s value against the basket of six major currencies, surged to 93.26 on Wednesday. It kept precious metals under pressure for the day. At the same time, the US Treasury yields dropped on Wednesday to 1.25% after rising in earlier trading hours to 1.30%.

Hawkish Federal Reserve July meeting minutes weighted on gold.

The Federal Reserve July meeting minutes revealed that officials still had faith in the recovery of the US economy. That’s despite the accelerated spread of the Delta variant, increased coronavirus cases, and the ongoing talks about tapering asset purchases by the central bank.

The minutes showed that many participants commented that financial and economic conditions would likely warrant a reduction in the coming months. Whereas, several other members indicated that tapering of asset purchases would not be appropriate before the early months of next year. On the other hand, some members ruled that reducing asset purchases this year could be suitable.

 Federal Reserve Jerome Powell Played on the Backfoot

According to the chairman of the Federal Reserve, Jerome Powell, the reduction of the stimulus by the Fed will require substantial progress in the job market. The talks about the timeline regarding reducing asset purchases have been central to discussion during the Fed meeting. Thus, the updates have been pushing gold prices to the downside.

This year, gold has already been under pressure due to successful vaccine rollouts, better-than-expected progress, and recovery in some economic sectors, along with the possibility of rising interest rates.

Quick Economic Events Review

On the data front, at 17:30 GMT, the building permits in July surged to 1.64M against the projected 1.61M. In July, housing starts dropped to 1.53M against the forecasted 1.60M. That supports the US dollar and adds to the loss in gold prices. 

Furthermore, the rising spread of the Delta variant of coronavirus across the globe and the fears raised about the faded economic recovery kept supporting gold prices. The mixed market sentiment kept the precious metal under consolidation and, hence, XAU/USD gave flat movement for the trading session.

Gold Price Forecast
XAU/USD Daily Chart

Gold Price Forecast – Technical Levels

Support Resistance

1780.21 1796.96

1771.18 1804.68

1763.46 1813.71

Pivot Point: 1787.93

Gold Price Forecast – Daily Technical Analysis: Upward Trendline Support 1,773

The gold price forecast remains bullish above the $1,773 support level. On the 4-hourly timeframe, the upward trendline is extending support at the 1,773 level. The closing of candles above this has the potential to trigger a bounce-off.

The metal extended trading with a slight bullish bias as it is gaining support at a 61.8% Fibonacci retracement level of $1,773. The XAU/USD pair has formed a series of neutral candles above the 61.8% Fibonacci level, signifying a weakness in a selling bias.

At the moment, the 50 day EMA (exponential moving average – red line) is also holding around 1,773 levels, indicating support for a bullish trend in gold. Besides, the leading indicator, Stochastic RSI, has entered the sell zone, holding at 6.70. Thus, the sellers may be exhausted now, and we may see bulls take over the market above the 1,772/1,773 level.

Lastly, we can also see an upward trendline that supports the bullish trend in gold at the 1,773 level. Therefore, the Forex trading market participants may buy above the $1,773 level to target the $1,801 and $1,809 levels. Alternatively, selling trades can be seen on a bearish breakout below the 1,772 level today. All the best!

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