The Gold price has continued to retreat from $1,900, slipping -0.70% to $1,864. This week’s FOMC will either make or break XAU/USD.
Gold has started the week on the back foot as we approach what could be the biggest clue for its prospects in quite some time.
On Wednesday, the 16th, the Federal Open Market Committee (FOMC) will announce if they have made any adjustments to interest rates. On balance, rates are likely to remain at the current level.
However, traders will be paying close attention to whether the Fed plans to start winding down their large bond-buying programs.
Moreover, market participants will be keenly monitoring Fed chairman Jerome Powell’s press conference following the decision. As always, the gold price will be reactive to JPow’s views on the alarming spike in inflation.
Bulls will be hoping the Fed still see the recent rise in the price of goods as ‘transitory’ and maintain to keep rates ‘lower for longer.’
However, there appears to be some doubt creeping into the market, and XAU/USD has just broken below an important trend line.
XAU/USD Technical Outlook
The daily chart shows a strong trend line has supported the price during the recent bull run from the March double-bottom.
After breaking the trend at $1,877, the gold price fell $14 to this morning’s $1,863.30 low.
This opens the door to a test of the important 200-day moving average at $1,839.90. This will be a key level to watch this week. If the price trades under the 200 DMA, we could see $1,800 in the blink of an eye.
Below the trend line, XAU/USD should continue to trade with a negative bias. That being said, bears should be mindful that the week ahead is likely to bring a lot of volatility to the table.
If gold recaptures the trend line, the June 1st high at $1,916.62 will be in its sights and will cancel the immediately bearish outlook.
Gold Price Daily Chart
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