Spot gold turned lower from its $2,600 record highs following the Fed’s rate of interest cut event!
Are we taking a look at a possibility to leap in XAU/USD’s long-term uptrend?
Let’s take a more in-depth take a look at the 4-hour timeframe:
Gold (XAU/USD) 4-hour Forex Chart by TradingView
In case you missed it, the Fed had a “Brat summer” moment and surprised some traders with a 50bps rate of interest cut on Wednesday. Not only that, however the “Dot plot” projections also pointed to more rate cuts this 12 months and the following.
Nevertheless, the Fed also raised its medium-term rate of interest forecasts, and JPow hinted in his presser that the following rate cut might not be smaller than 50 basis points.
This is probably going why the U.S. dollar remained resilient against its counterparts despite the speed cut. XAU/USD, which has been having a superb September to date, jumped to a recent record high of $2,600 before the bears stepped in.
Do not forget that directional biases and volatility conditions in market price are typically driven by fundamentals. In case you haven’t yet done your homework on the U.S. dollar and gold, then it’s time to examine out the economic calendar and stay updated on every day fundamental news!
Are XAU/USD bulls just taking a breather?
We’re taking a more in-depth take a look at the $2,550 area that lines up with the Pivot Point ($2,550) line and the 38.2% Fibonacci retracement of gold’s latest upswing.
If the long wicks on the 4-hour chart result in green candlesticks and consistent trading above $2,550, then XAU/USD could attract enough buying pressure to retest its $2,600 previous highs.
In case you’re anticipating a deeper pullback for gold prices, we also can consider a possible trip to the $2,525 zone near the 100 SMA, S1 ($2,514) Pivot Point, 61.8% Fib retracement, and former resistance levels.
A retracement to the lower potential support zone would offer a greater entry price for many who expect XAU/USD to make recent monthly highs in the following few weeks.
After all, we’re not discounting a bearish turn gaining momentum and resulting in a protracted downswing.
Be careful for more bearish candlesticks and consistent trading below the mid-channel support zone which could lead on to a retest of previous lows near $2,500.
Don’t forget to practice proper risk management and stay aware of top-tier market catalysts when trading this one. Good luck!