Gold maintains consolidation sentiment above $2,300 with eyes on the Fed later this week

After losing its boiling point last week, gold is now in a slightly more consolidating mood. Buyers are able to sustain the price above $2,300 and are looking for a third straight day of gains. Still, this is only a small part of the recovery from the drop above $2,400 on April 19. We see gold trading around $2,340 today, but what does the chart say?

At current levels, the price of gold is trading between the 100 (red line) and 200 hour moving averages (blue line). This suggests that the short-term bias is more neutral, with traders appearing to respect the technical limits above.

The dollar itself is also in flux, as it hasn’t exactly impressed after Q1 US GDP data and PCE prices last week. Thus, the greenback is not really pushing upwards after the first gains in April. And for gold, the easing of geopolitical tensions is one of the factors contributing to last week’s decline. But also because buyers seem to be calming down, after a wave of gains since March. I mean, even in April, gold is still up almost 5%, so that says a lot.

But for now, we see traders competing in the short term. Break below the 100 hourly moving average and sellers will regain control. However, they will first need to look for a stronger push below the $2,300 mark. A daily close below will be essential to reaffirm any new downside, at least in the short term.

As for the buyers, cross the 200 hour moving average and the short-term bias will become more bullish again. And this could invite retesting of the $2,400 mark.

For trading this week, the key catalyst will be the upcoming FOMC meeting. It all depends on the Fed’s outlook and while this should be more or less a tentative meeting, traders will be looking at Powell’s remarks for clues to work on.

As it stands, fed funds futures are pricing in about a 34% chance for a July move and about a 78% chance for a September move. The total rate cut expected for the year amounts to approximately 36 basis points. How this changes will be the main driver of gold price action this week. All that before we get to the US jobs report on Friday.