Gold Price Update: Bullish Bias Intact Ahead of FOMC Minutes

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The bullish bias on gold price remained intact on Tuesday, as investors continue to stay cautious ahead of the release of the FOMC minutes tomorrow. Gold price for spot gold contracts is trading 1.75% higher at 2008.81 and remains on course for a second bullish day for the week. 

The bullish sentiment on gold price action remained intact after data from Japan released yesterday revealed that the country suffered its biggest economic contraction in history in the second quarter of 2020. This follows a pattern seen in the US and several other countries as a result of the impact of the coronavirus pandemic. 

Furthermore, data from the US have been mostly uninspiring so far. US lawmakers have failed to reach an agreement on the latest round of financial stimulus payments to families and small businesses, and latest escalation in US-China tensions have all served to continue to depress the sentiment on the US Dollar. 

The FOMC minutes are due by 6 pm UTC on Wednesday. Investors will be watching to see if there is any deviation from the tone of the last minutes. The next interest rate and policy review will be in September, and traders would be watching to see if there is a change in the inflation target above 2%. The XAUUSD pair will be a good pair to trade if there is any new stuff in the minutes worth trading. 

Outlook for Gold Price

Gold price on the XAUUSD chart (daily) is currently testing the resistance formed by the 23.6% Fibonacci retracement area at 2008..04. A break above this area targets the 2050 price level (10 August 2020 high), with 2075.44 remaining the level to beat for bulls.

On the flip side, rejection at the current level allows for a pullback towards 1980.74. A bounce here would send prices back towards the 2008.04 price level, whereas a breakdown at this level targets the 1918.68 support target, with the support wall at 1898.48/1900.76 (50% Fibonacci price level) constituting the next downside barrier. Only a breach of this barrier will bring in the 12 August low at 1850.29 (78.6% Fibonacci level).

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XAUUSD Daily Chart

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