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Forecast for the price of gold: XAUUSD anticipates a recovery from $1,740 ahead of Fed policy

Daniel Rogers

Jul 26, 2022 12:01

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Due to oscillators turning severely oversold on a smaller period, the price of gold (XAUUSD) is expected to rise following a sharp decline to close to $1,714.76. The precious metal had a significant drop on Monday after failing to surpass the peak from the previous week, which was about $1,740.00. Given that investors are staying away ahead of the Federal Reserve's interest rate policy, the sideways trend in gold prices is expected to persist (Fed).


Given that Fed chairman Jerome Powell is committed to achieving price stability, investors should be prepared for a rate increase of 75 basis points (bps). Since price pressures have increased to 9.1 percent annually and have not shown any signs of abating, market players earlier banked on a rate increase of 1 percent. However, the US economy's slowing is not causing the Fed to declare a significant rate rise.


Initial Jobless Claims have risen to a seven-month high of 251k as a result of the expensive US dollar index's (DXY) negative impact on US exports and, naturally, on corporate profits. After the digital behemoth Google stopped hiring, Meta, Spotify, and other major players in the industry are adopting layoff plans for employees. This might cause future US Nonfarm Payrolls (NFP) data to be uncertain. Moreover, it will support the gold bulls.


The 200-period Exponential Moving Average (EMA) for gold on an hourly basis is now at $1,720.43 after first rising above it. This suggests a corrective move rather than a reversal and will be followed by an impulsive bullish wave.


It is important to note that after eight weeks, the Relative Strength Index (RSI) (14) first showed an establishment in the bullish region of 60.00-80.00. This suggests that the short-to-long-term trend is optimistic and that market players will view a slight drop as a buying opportunity. Additionally, around about 40.00, the RSI (14) is finding support.