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XAU/USD forecast: Buyers to challenge 1815-16


  • Gold is off the 3-week highs, looking for directional bias.
  • FOMC meeting minutes and rise in yields have given strength to the US Dollar.
  • US Jobless Claims and ECB can further impact the XAU/USD.

XAU/USD is taking back its gain to a key level of $1815 near the 3-week highs. The precious metal has been in red for the first time in the week. The upsurging demand for US Dollar due to the market’s risk-aversion stemming from spreading COVID cases is pressing the gold. Furthermore, the hike in US 10-years treasuries bond yields from the 5-month bottom weighs the non-yielding gold.

FOMC meeting minutes

The Fed’s intention to prevent excessive inflation from rising has awakened the Greenback.

How quickly everything changes in forex! Before you have time to blink an eye, some weak turn into strong, while others become even weaker. Judging by the minutes of the June meeting of the FOMC, officials believe that the conditions for reducing the scale of QE will be met somewhat earlier than they expected at previous meetings. Such rhetoric makes the Fed one of the most aggressive central banks in Pandexit – the process of rolling back monetary stimulus deployed to combat the pandemic.

To understand what is happening today, you need to look back at what happened yesterday. More recently, the Fed has moved to target average inflation, which assumes that it will allow values ​​above 2%. Such a strategy allows the central bank to justify maintaining super-weak monetary policy for a long time.

What’s next for XAU/USD?

The US Jobless Claims data will be released later today. The US Dollar can catch fresh bids if data comes better than expected. Meanwhile, yield dynamics and Greenback will play much importance. Investors are also awaiting ECB inflation decisions and COVID updates for further impetus.

XAU/USD technical outlook and key levels

The XAU/USD price is capsulated between 50 and 200 SMAs on the 4-hour chart. Volume is constantly staying below the average. Although the metal has found some bids during earlier European sessions, there is no clear bias unless the price catches bids above the 200-SMA and last day’s highs of $1815. On the flip side, if 50-SMA is broken, we can expect a deeper decline to the $1775 region.

4-hour chart of XAU/USD

4-hour chart of XAU/USD

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