Spot gold retreats from record highs of $2,600 after US Federal Reserve cuts interest rates!
Are we looking for an opportunity to join the long-term uptrend in XAU/USD?
Let’s take a closer look at the 4-hour time frame:
Gold (XAU/USD) Forex 4 Hours Chart by TradingView
In case you missed it, the Federal Reserve had aChildish summer“This moment caught some traders by surprise with the 50 basis point rate cut on Wednesday. Not only that, but the “dot plot” forecast also pointed to more rate cuts this year and next.
However, the Fed also raised its medium-term interest rate outlook, with J.P. Bowe hinting at his press conference that the next rate cut may not be less than 50 basis points.
This is likely why the US dollar has held up well against its peers despite the rate cuts. The XAU/USD pair, which has been performing well in September so far, rose to a new record high of $2,600 before the bears stepped in.
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on the US dollar and gold yet, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
Are the XAU/USD bulls taking a break?
We take a closer look at the $2,550 area which coincides with the pivot point line ($2,550) and the 38.2% Fibonacci retracement of gold’s recent rally.
If the long wicks on the 4-hour chart lead to green candles and steady trading above the $2,550 level, the XAU/USD pair could attract enough buying pressure to retest its previous highs at $2,600.
If you expect a deeper pullback in gold prices, we can also consider a potential trip to the $2,525 area near the 100 SMA, S1 pivot point ($2,514), 61.8% Fibonacci retracement, and previous resistance levels.
A return to the lower potential support area would provide a better entry price for those who expect the XAU/USD pair to reach new monthly highs in the next few weeks.
Of course, we do not rule out a bearish turn that will gain momentum and lead to a long decline.
Watch for more bearish candles and continued trading below the middle channel support area which could lead to a retest of previous lows near $2500.
Don’t forget to practice proper risk management and stay aware of top-tier market triggers when trading this product. Good luck!