By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
At the end of July, Gold prices reached stability inside the sideways channel. On Monday July 29th, Gold is mostly trading around 1418.00.
This week, market players’ attention is focused on the US Federal Reserve meeting. It is highly anticipated, because the regulator is expected to cut the benchmark rate by 25 basis points in order to loosen its monetary policy and create some financial safety margin. The White House really needs this, so that it could continue its trade wars across the globe. However, recent macroeconomic numbers from the USA are pretty decent and do not force the Fed to cut the rate: it is apparent that the economy may be really efficient and happy with the current rate value.
If on Wednesday the regulator hints at another rate cut in September, the USD may plunge, while Gold may get significant support.
However, if the meeting goes without any surprises and the regulator refuses to comment on its plans relating to further changes in the monetary policy, the USD may slightly recover. This possibility is quite neutral for investors, but not too good for Gold, which is now acting as a “safe haven” asset for hedging risks.
In the H4 chart, Gold is forming another descending wave, the third one inside the downtrend, with the target at 1395.55. After reaching it, the pair may start another correction towards 1414.00 and then form a new descending structure with the first target at 1376.00. However, this scenario may no longer be valid if the price grows to break 1430.00. In this case, the pair may chose an alternative scenario with a new correction towards 1440.00. Later, the market may resume trading inside the downtrend with the short-term predicted target at 1395.55. From the technical point of view, this scenario is confirmed by MACD Oscillator, as its signal line is moving below 0.
As we can see in the H1 chart, XAUUSD is trading to rebound from 1424.50 to the downside. This structure may be considered as a downside continuation pattern. After breaking 1414.40, the instrument may continue falling towards 1404.10. Later, the market may start another correction to return to 1414.40 and then form a new descending structure to reach 1395.55. However, this scenario may no longer be valid if the price breaks 1430.00. In this case, the price may be corrected towards 1440.00. After that, the instrument may start a reversal pattern for a new descending wave with the target at 1395.55. From the technical point of view, this scenario is confirmed by Stochastic Oscillator, as its signal is moving below 50.00. Still, this scenario may no longer be valid if the signal line steadily moves to the upside. In case 50.00 is broken, the pair may continue growing towards 1440.00.
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.