Gold price remains under the critical zone of $1,800 per ounce ahead of the Fed meeting minutes. The environment of high interest rates remains a key bearish driver for the precious metal.
Fundamentals
On the one hand, recent data indicated that US consumer prices increased at a lower-than-expected pace in July following a decline in gasoline prices. Even so, hawkish comments by several Fed officials is weighing on gold price ahead of the Fed meeting minutes scheduled for release on Wednesday.
Amid the strong US labor market and lower-than-expected inflation figures, bets on the Fed’s move in its September meeting have been swinging between a hike of 50 and 75 basis points. Subsequently, July’s meeting minutes are set to avail further clues on the US central bank’s next move.
Gold price may have found its short-term bottom at the one-year low it hit in mid-July at $1,681.16. Nonetheless, it may remain under pressure in coming weeks amid an environment of high interest rates. This is founded on the Fed’s position that dealing with the decades-high inflation is its top priority.
Seeing that US inflation is set to remain high in the fourth quarter, investors will be keen on the economic data and its impact on the Fed’s path to ease price pressures. To move higher, the bulls will need to gather enough momentum to break the resistance at the psychologically crucial zone of $1,800.
Gold price prediction
Gold price edged lower on Tuesday even as it trades within a rather tight range ahead of the Fed meeting minutes. As shown on its four-hour chart, it remains below the 25 and 50-day exponential moving averages. Based on these technical indicators, the precious metal will likely remain under pressure in the short term.
I expect gold price to remain range-bound as investors await further cues from the Fed meeting minutes. As such, 1,783.03, which is along the 50-day EMA, will be a resistance level worth watching in the short term. As the range-bound trading continues, the bulls are keen on defending the current support zone at 1,773.73.
In reaction to the FOMC minutes, it may pull back further to find support at 1,767.53. Notably, this bearish thesis will be invalidated by a move above 1,791.89 as it will signal enough momentum for the bulls to retest the psychologically crucial zone of 1,800.
