Gold price is clinging onto the recent recovery gains near $1,650 on the US Federal Reserve (Fed) day. XAUUSD bulls could target $1,675 on Fed’s dovish signal, FXStreet’s Dhwani Mehta reports.

Gold could resume its broader downtrend on a hawkish surprise

“XAUUSD price is eyeing a sustained break above the previous day’s high of $1,657 in order to challenge the bearish 21-Daily Moving Average (DMA) at $1,660. If the Fed delivers a dovish rate hike, then gold bulls could flex their muscles towards the end-October high at $1,675.

“The renewed downside will open up if Fed Chair Jerome Powell maintains that there is a need for more aggressive rate increases to contain inflation. However, that seems to be a remote possibility (in my view).” 

“On a hawkish surprise, gold price could resume its broader downtrend, with the initial support seen at the recent range lows around $1,638. The next downside cap is aligned at the $1,620 round number, below which the October low at $1,617 could be threatened.”

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