Gold Price Short-term Outlook: XAU/USD Bulls Fight to Confirm Major Low- Fed on Tap

Gold Technical Outlook: XAU/USD Short-term Trade Levels

• Gold has rebounded sharply after registering a fresh yearly low earlier this month.
• The recovery is attempting to reclaim the yearly open, strengthening the case for a developing base.
• A break above the monthly open needed to signal a more significant low is in place.
• Losses below the yearly low-day close would threaten downtrend resumption.
• The Fed decision and updated economic projections could provide the catalyst for the next major move.
• Resistance 4367, 4454, 4487-4540 (key)- Support 4212 (key), 4074/98, 3887

Gold has staged an impressive recovery after plunging to a fresh yearly low earlier this month, with XAU/USD now reclaiming the yearly open and challenging the broader bearish structure. The rebound is beginning to build a stronger technical case that a more significant low may be in place, but key resistance levels still stand overhead. With the Federal Reserve rate decision and updated economic projections on tap tomorrow, traders are looking for the catalyst that could either validate this recovery or halt it in its tracks. Battle lines drawn on the XAU/USD short-term technical charts.

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Gold Price Chart – XAU/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Technical Outlook: In last month’s Gold Short-term Outlook we noted that XAU/USD had rebounded off support at the 200-day moving average and that, “From a trading standpoint, losses would need to be limited to 4383 IF price is heading higher on this stretch with a close above 4533 needed to invalidate the downtrend and fuel the next leg of the recovery.” Gold rebounded more than 5.2% off the May lows the following day, and despite marking a close high at 4540, the bulls were unable to stabilize the recovery with XAU/USD reversing sharply lower into the start of June.

The selloff extended more than 11.3% from the May open to briefly register a fresh yearly low before rebounding sharply last week off confluent support at 4074/98- a region defined by the 61.8% extension of the March decline and the objective March swing low. The rally takes gold back above the median line and into the objective yearly open at 4319 ahead of tomorrow’s highly anticipated Fed rate decision. Is a low now in place? The jury is still out, but from a technical standpoint, the evidence is starting to mount.

Gold Price Chart – XAU/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Notes: A closer look at gold price action shows XAU/USD rallying sharply into the weekly open on news that an agreement has been reached regarding a deal with Iran. The rally halted yesterday at the May low at 4367 with the weekly range set just below. A topside breach above this level exposes subsequent objectives at the 200-day moving average (currently ~4454) and key resistance at 4487-4540- a region defined by the 61.8% retracement of the May decline, the March low-week close (LWC), the 2025 high-day close (HDC) and the June open. Note that the 75% parallel converges on this zone into the close of the week and a breach / daily close above would ultimately be needed to suggest a more significant low is in place and a larger trend reversal is underway. Subsequent resistance eyed at the May HDC at 4716.

Initial support rests with the yearly low-day close (LDC) at 4212- note that the medina-line converges on this level over the next few days and losses below this slope would threaten resumption of the broader downtrend. Subsequent support rests at 4074/98 and the October swing low at 3887.

 

Bottom line: Gold has rebounded sharply off technical support near the yearly low with the recovery now straddling the yearly open. From a trading standpoint, losses should be limited to 4212 IF price is heading higher on this stretch with a close above 4540 needed to validate a near-term technical low and fuel the next leg of the advance.

Beyond the rate decision, the Fed’s updated SEP will be the key focus, offering fresh projections for growth, inflation, employment, and the expected policy path. As Kevin Warsh chairs his first FOMC meeting, markets will be closely scrutinizing the forecasts and guidance for any shift in the Committee’s outlook. Recent reports suggesting progress toward an Iran agreement have eased concerns about a sustained energy-price shock, making the Fed’s assessment of inflation pressures particularly important. Fed Fund Futures currently pricing a roughly 55% chance of at least one 25 bps hike by the end of the year and a more dovish tone further fuel this gold advance. Stay nimble into the release and watch the weekly closes for guidance. Review my latest Gold Weekly Technical Forecast for a closer look at the longer-term XAU/USD trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex