Gold Price is trading in the red after Tuesday’s dead cat bounce ahead of the all-important Federal Reserve showdown. As FXStreet’s Dhwanie Mehta notes, XAU/USD is set to test the 200-day moving average (DMA) at $1,835 on aggressive Fed stance.

Daily close above100-DMA at $1,879 needed to confirm a bullish reversal

“With a 50 bps rate hike and the commencement of the Fed’s balance sheet reduction almost a done deal on Wednesday, gold bears need an aggressively hawkish forward guidance to extend the ongoing downtrend.”

“Gold could revisit Tuesday’s low of $1,850. On an aggressive Fed policy outlook, hinting at a more than 50 bps hike in June, XAU/USD could accelerate the downside momentum to hit the 200-DMA at $1,835.”

“If the Fed disappoints the hawks, then gold bulls will likely challenge the 100-DMA at $1,879 again. Acceptance above the latter is needed on a daily closing basis to affirm a bullish reversal from over three-month lows. The next upside target for buyers is envisioned at Monday’s high of $1,900.”

See – Fed Preview: Forecasts from 18 major banks, 50bps is universally expected