Gold price prediction: XAU/USD consolidates below 100 EMA ahead of retail sales data
Gold price trend points towards $2600 support level amid Fed policy anticipation
Gold prices have faced downward pressure in recent days, trading below key technical levels, with market participants holding back ahead of the Federal Reserve's crucial policy decision.
After hitting a double top pattern in the previous week, XAU/USD slipped 3% below the 100 EMA, a key resistance level, which has been acting as a cap on any upward movement. Currently trading near $2660 per ounce, the yellow metal remains under the weight of rising US Treasury bond yields and a stronger US Dollar.
The Fed’s stance on interest rates has a bearish impact on gold. Expectations for a less dovish Fed, particularly with regards to rate cuts, have contributed to the rise in US Treasury yields, which in turn supports the US Dollar and makes gold a non-yielding asset.
However, external factors are providing some support for gold. Geopolitical risks, including the ongoing Russia-Ukraine conflict and tensions in the Middle East, continue to offer a safety net for the precious metal. These factors are helping to limit the downside, even as broader market conditions push gold lower.
Gold price bearish trend persists with $2600 in sight
The 4-hour technical chart paints a picture of consolidation in gold prices and a potential for further downside. The 100 EMA on the 4-hour chart has proven a significant hurdle for bulls, keeping the price below this level and exerting downward pressure. Additionally, the Relative Strength Index (RSI) is hovering near 40, not yet in oversold territory, which suggests there could be more room for declines before any significant reversal. A key support level to watch lies around $2600 per ounce, where a psychological double bottom has formed, potentially setting up this level as the next bearish target.
Gold price dynamics (September-December 2024). Source: TradingView.
Traders are now awaiting the US Retail Sales figures, due later today, for further cues on the strength of the US economy and its potential impact on Fed policy. With the Federal Open Market Committee (FOMC) policy meeting coming up on Wednesday, the next direction for gold could be heavily influenced by the outcome. If the Fed leans towards a more hawkish stance, gold could face further pressure, potentially testing the $2600 level. However, should the central bank signal a more dovish outlook, the safe-haven demand might bring gold back into focus.
Gold prices (XAU/USD) remain relatively stable in recent sessions, trading near a one-week low. Price volatility stays muted amid geopolitical risks and Fed slowdown.
