Gold price is licking its wounds but within a familiar range. As FXStreet’s Dhwani Mehta notes, XAU/USD awaits the Fed for a sustained move below $1,650.

The Fed is likely to maintain its pledge to fight inflation

“The next leg lower in gold remains at the mercy of the Fed’s projection of the terminal rate, in the face of the expected 75 bps increase. Should the US central bank project a terminal rate of above 5% in the coming years, then it could reinforce hawkish expectations and trigger a fresh rally in the dollar. The USD-priced gold is set to suffer, as the Fed is likely to maintain its pledge to fight inflation.”

“In the lead-up to the Fed showdown, XAU/USD has charted a bear pennant formation on the daily sticks. Sellers need a daily closing below the rising trendline support at $1,678 to confirm the downside break from the bear pennant. The bearish continuation pattern will revive the XAU/USD downtrend towards the $1,650 psychological. Additional declines could call for a test of the descending trendline support at $1,645.”

“On the flip side, any recovery attempts will need acceptance above the recent range highs near $1,680. The next upside barrier is aligned at around $1,700. Daily closing above the latter is critical to unleashing the further recovery towards the bearish 21-Daily Moving Average (DMA) at $1,707.”

See – Fed Preview: Forecasts from 16 major banks, fast pace hiking cycle continues