Gold Price Forecast: XAU/USD threatens 100-day SMA ahead of FOMC decision

XAU/USD fell near the 100-day SMA near $1,960 but held weekly gains.
USD 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 traded near the 100-day Simple Moving Average of $1,962, experiencing a 0.30% decline but recorded a weekly gain, its third in a row.

The prevailing strength of the US Dollar continues 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 (Fed) to maintain a more aggressive stance. In that sense, the US bond yield rose sharply on Thursday, boosting the USD and applying the non-yielding metal selling pressure.

Ahead of next week’s Federal Open Market (FOMC) decision, markets have practically priced in a 25 basis point (bps) hike, and robust labour market data boosted the odds of an additional hike past July. However, those odds remain low, near 30%. In addition, Chair Powell’s presser 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 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 Average (SMA) indicates that the overall trend remains to favour 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.