#XAUUSD @ 1,925.34 Gold price edges lower on Wednesday, though the downside is likely to remain cushioned. (Pivot Orderbook analysis)

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• Gold price edges lower on Wednesday, though the downside is likely to remain cushioned.
• A modest US Dollar downtick could lend support to the XAU/USD amid a softer risk tone.
• The market focus remains glued to the Federal Open Market Committee (FOMC) decision.

The pair currently trades last at 1925.34.

The previous day high was 1931.15 while the previous day low was 1900.86. The daily 38.2% Fib levels comes at 1919.58, expected to provide support. Similarly, the daily 61.8% fib level is at 1912.43, expected to provide support.

Gold price struggles to capitalize on the overnight goodish rebound from the $1,900 mark, or a nearly two-week low and edges lower on Wednesday. The XAU/USD remains on the defensive through the first half of the European session and is currently trading just below the $1,925 level. The downside, however, seems cushioned, at least for now, as traders might refrain from placing aggressive directional bets ahead of the key central bank event risk.

The Federal Reserve (Fed) will announce its decision at the end of a two-day policy meeting later today and is widely expected to further slow the pace of the rate-hiking cycle. In fact, the CME’s FedWatch Tool points to a nearly 100% chance of a smaller 25 basis points (bps) rate hike amid signs of easing inflationary pressures in the United States (US). The bets were reaffirmed by Tuesday’s release of the US wage growth data, which showed that labor costs increased less than expected in the fourth quarter. This, in turn, leads to a fresh leg down in the US Treasury bond yields and continues to weigh on the US Dollar. A weaker Greenback could act as a tailwind for the US Dollar-denominated Gold price.

The recent US macro data, however, point to point to a resilient economy and back the case for the Fed to stick to its hawkish stance for longer. Moreover, Fed officials have been stressing the need to keep rates higher for longer in order to bring down inflation. Hence, the market focus will be on the accompanying monetary policy statement and Fed Chair Jerome Powell’s comments at the post-meeting press conference. Investors will look for cues about the Fed’s future rate-hike path, which will influence the USD and determine the near-term trajectory for the non-yielding Gold price. In the meantime, the prevalent cautious market mood might contribute to limiting losses for the safe-haven XAU/USD.

Market participants now look to the US economic docket, featuring the release of the ADP report on private-sector employment, ISM Manufacturing PMI and JOLTS Job Openings. This, along with the US bond yields, could drive the USD demand and produce short-term opportunities around Gold price later during the early North American session. The immediate market reaction to the US macro data, however, is more likely to fizzle out quickly, supporting prospects for an extension of the intraday range-bound price action.

From a technical perspective, the $1,900 level now seems to have emerged as an immediate strong support. A convincing break below might prompt some technical selling and expose the $1,880-$1,877 support. Gold price could eventually slide to test the next relevant support near the $1,856-$1,855 region, which if broken decisively will shift the near-term bias in favour of bearish traders.

On the flip side, any meaningful upside is likely to confront some resistance near the multi-month top, around the $1,949 region touched on January 26. A sustained strength beyond has the potential to lift the Gold price to the $1,969-$1,970 region. The momentum could get extended further and allow the XAU/USD to surpass an intermediate hurdle near the $1,980 zone. Bulls might then aim to reclaim the $2,000 psychological mark for the first time since March 2022.

Technical Levels: Supports and Resistances

XAUUSD currently trading at 1924.59 at the time of writing. Pair opened at 1928.47 and is trading with a change of -0.2 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1905.58, 50 SMA 1836.67, 100 SMA @ 1759.53 and 200 SMA @ 1775.72.

The previous day high was 1931.15 while the previous day low was 1900.86. The daily 38.2% Fib levels comes at 1919.58, expected to provide support. Similarly, the daily 61.8% fib level is at 1912.43, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1909.17, 1889.87, 1878.88
• Pivot resistance is noted at 1939.46, 1950.45, 1969.75

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