With a pivotal week ahead for precious metals, the gold spot price (XAUUSD) has traded rangebound as major central banks prepare to deliver the next round of interest rate decisions. The US Federal Reserve, European Central Bank (ECB), and Bank of Japan (BoJ) have their interest rate decisions this week. At the same time, the PCE Price Index, the Fed’s preferred inflation gauge, is due on Friday, setting up an exciting trading week.
The Fed and ECB are both expected to deliver another 25bps rate hike, while the BoJ might stick to their ultra-loose monetary policy. However, the market’s view could be stretched beyond this week, emphasizing the commentary given by the Fed on their stance as we advance. With recent chatter of a potential end to the hiking cycle after this week, the commentary and PCE Price Index release could steal the shine, with the gold spot price at the forefront of potential price reactions to these developments.
Technical
On the 4H chart, an ascending triangle experienced a breakdown in the Friday session, with the price action shifting below the daily pivot point and 50-day moving average. With the pivot point at $1,964.12 per ounce acting as resistance, the market could continue its consolidation downward in the upcoming sessions.
In this case, support at $1,954.53 per ounce (S1) could be the first potential level of interest before lower support at $1,950.75 per ounce comes into play. If the interest rate decisions are hawkish, the price action could sustain the downward trend toward $1,939.24 per ounce.
However, a breakout at the pivot point could signal a reversal to retest the breakout point at around $1,971.47 per ounce (R1). From there, the prior uptrend could continue toward resistance at $1,980.95 per ounce.
Summary
The gold spot price is currently trading in a narrow range in anticipation of the interest rate decisions due this week. With the breakdown at the ascending channel and strong resistance from the pivot point and 50-day moving average, the current consolidatory downtrend could continue toward $1,954.53 and $1,950.75 per ounce.
Sources: Koyfin, Tradingview
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