Gold Price Forecast: XAU/USD Threatens 100-Day SMA Ahead Of FOMC Decision

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The XAU/USD pair fell near the 100-day SMA at around $1,960, but the pair ultimately held onto weekly gains.
The US dollar continued to gain ground on Friday following solid Jobless Claims data.
All eyes are on the FOMC decision next week.

At the end of the week, the XAU/USD pair traded near the 100-day Simple Moving Average of $1,962, experiencing a 0.30% decline. However, the pair nonetheless recorded a weekly gain, its third in a row.

The prevailing strength of the US dollar continued to exert downward pressure on XAU/USD. Notably, the recent release of Initial Jobless Claims data by the US Department of Labor revealed a lower figure of 228,000 people filing for unemployment benefits in the second week of July, below the market expectation of 242,000.

These positive employment figures reflect a robust US economy, potentially prompting the Federal Reserve to maintain a more aggressive stance. In that sense, the US bond yield rose sharply on Thursday, boosting the US dollar and applying the non-yielding metal selling pressure.

Ahead of next week’s Federal Open Market decision, markets have practically priced in a 25 basis point hike, and robust labor market data boosted the odds of an additional hike past July. However, those odds remain low, near 30%. In addition, Chair Powell’s words will be closely watched as investors look for clues regarding forwards guidance.

XAU/USD Levels to Watch

The daily chart of XAU/USD indicates a negative market sentiment that is dominated by bears. The Relative Strength Index (RSI) stands in positive territory above the midline but with a negative, while the Moving Average Convergence Divergence (MACD) displays fading green bars, signalling exhaustion for the bulls.

In the broader context, despite the bearish momentum, the price trading above the 20-, 100-, and 200-day Simple Moving Averages indicates that the overall trend continues to favor the bulls.

Support levels: $1,960 (100-SMA), $1,950, $1,936 (20-day SMA).
Resistance levels: $1,970, $1,987 (monthly high), $2,000.