Gold price is consolidating Thursday’s massive sell-off on the final trading day of the week. Pre-FOMC adjustments could trigger a brief rebound in XAU/USD, FXStreet’s Dhwani Mehta reports.

Inverted cup and handle breakdown suggest more pain ahead of XAU/USD

“The narrative of hefty Fed rate hike expectations in the coming months could continue playing out this Friday, although gold traders could take profit on their short positions under the pretext of excessive selling and position re-adjustments ahead of next week’s FOMC decision.”

“Gold yielded a daily close below the rising trendline support, then at $1,693, confirming an inverted cup and handle formation. Should the selling pressure gather steam again, then bears could target the $1,650 psychological level following a firm break below the previous day’s low of $1,660.”

“On the flip side, the recovery will need acceptance above the 2022 low of $1,681, above which $1,691 will be challenged. The $1,700 level will be the next upside barrier on the road to recovery.”