Market Analysis

Ahead of the Fed's announcement, the gold price is trapped in a range and struggles to find a clear intraday trend

Amos Simanungkalit · 18 Sep 2024174.6K Views

Gold price (XAU/USD) struggles to gain any significant momentum on Wednesday, consolidating within a range near the $2,570 level as the European session approaches. Traders appear cautious, awaiting the outcome of the much-anticipated two-day Federal Open Market Committee (FOMC) meeting before committing to a more decisive directional move. Ahead of this key central bank event, increasing speculation about more aggressive policy easing from the Federal Reserve (Fed) is capping the US Dollar’s recovery, following its lowest point since July 2023 on Tuesday. This, in turn, provides some support to the non-yielding yellow metal.

Additionally, concerns over escalating geopolitical tensions in the Middle East, coupled with US political uncertainty ahead of the November presidential election, may continue to bolster Gold prices. This week, investors will also keep a close watch on the Bank of England (BoE) decision on Thursday and the Bank of Japan (BoJ) policy update on Friday. Given these key risks, it seems prudent to wait for a more substantial sell-off before confirming that XAU/USD has peaked in the near term, following its retreat from the all-time high of $2,589-$2,590, touched earlier in the week.

Technical Outlook: Gold's upside potential remains intact
From a technical standpoint, bulls may prefer to wait for a break above the $2,589-$2,590 region—an all-time high hit on Monday—before entering new positions. A sustained move higher could drive Gold prices beyond the $2,600 threshold, with potential to test the upper boundary of a short-term ascending channel that has been forming since late June when prices dipped below $2,400. This resistance zone is currently around the $2,609-$2,610 level, and a clear break could confirm a fresh breakout, paving the way for a continuation of the established uptrend.

On the downside, a dip below the overnight low near $2,561-$2,560 may trigger further declines, potentially opening the path toward the $2,530-$2,525 horizontal resistance area. Any additional losses are likely to attract new buying interest around the psychological $2,500 level, which serves as a key support. A decisive break below this point could drive Gold down to the $2,475-$2,470 region, where the 50-day Simple Moving Average converges with the lower boundary of the aforementioned channel.