Gold – XAU/USD Analysis – June 16, 2021

FOMC & FED Rate Decision in Highlights!

Gold prices were closed at $1859.45 after placing a high of $1870.85 and a low of $1853.10. Gold dropped for 3rd consecutive session on Tuesday and remained consolidated in a tight range ahead of the U.S. Federal Reserve meeting expected to indicate the tapering of asset purchases. However, the demand for the Federal Reserve's repo facility was surging, which suggested that liquid conditions in the market were more than abundant. This portrays that the market was probably prepared to survive a gradual scaling back of asset purchases.

The U.S. dollar surged and reached near the 1-month highest level as the DXY strengthened 0.1%, made the dollar strong against its rival currencies that made gold more expensive for other currency holders and dragged its prices downward. Despite substantial growth in the economy and a patchy recovery in the job market, many economists anticipate a taper announcement in the upcoming two-day policy meeting by the Federal Reserve, whose outcome will be announced today on Wednesday.

Market participants were highly anticipating that the Fed would stick to its previous script of the minutes; however, the recent improvements in the labor market along with the higher numbers of inflation raised concerns that Fed could be less dovish this week.

On the data front, at 17:30 GMT, the Core Retail Sales in May dropped to -0.7% against the expected 0.4% and weighed on the U.S. dollar that limited the downfall in gold prices. The PPI in May surged to 0.8% against the projected 0.5% and supported the U.S. dollar that added further loss in the yellow metal prices. In May, the Retail Sales declined to -1.3% against the forecasted -0.6% and weighed on the U.S. dollar that further caped loss in gold prices. The Core PPI also surged to 0.7% against the expected 0.5% and supported the U.S. dollar that dragged gold further downside.

The Empire State Manufacturing Index dropped to 17.4 against the expected 22.2 and weighed on the U.S. dollar. At 18:15 GMT, the Industrial Production in May rose to 0.8% against the anticipated 0.6% and supported greenback that added weight on gold. The Capacity Utilization Rate remained flat with the expected 75.2%. At 19:00 GMT, the Business Inventories dropped to -0.2% against the estimated -0.1% and supported theU.S. dollar that added further loss in gold prices. The NAHBB Housing Market dropped to 81 against the forecasted 83 and weighed on the greenback. The mixed macro-economic data release from the U.S. on Tuesday kept the U.S. dollar under highlights and dragged gold on the downside.

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Gold Intraday Technical Level**

Support Resistance

1851.41 1869.16

1843.38 1878.88

1833.66 1886.91

Pivot Point: 1861.13

Gold - XAU/USD - Technical Outlook

On Wednesday, the precious metal gold price continues to trade with a bearish bias at the 1,859 level as traders failed to break above the 38.2% Fibonacci retracement lead resistance area of 1,867. At the moment, gold is consolidating at 1,860 levels, gaining immediate support at 1,851 and 1,843 levels. At the same time, the next resistance level stays at 1,866 and 1,873 levels. The 1,866 level is extended by a 38.2% Fibonacci retracement level, for your information, while a 50% Fibonacci correction level extends 1,873. On Wednesday, the U.S. FOMC and FED monitory policy decisions will be the main highlight of the day. As discussed above, the FED is likely to sound less dovish now amid improved economic events; therefore, the gold's price can face bearish pressure. All the best!