XAUUSD Gold Forecast: Will FED meeting be the catalyst?

Shortened Version of XAUUSD Weekly Forecast.

What could drive Gold prices higher? Because XAUUSD needs a catalyst to go higher

Changes in the trade-weighted US Dollar. Weak USD. / Not yet
Negative interest rates / No
Changes in nominal yields on10-year U.S. Treasuries / Not supportive for Gold at the time being
US Economic Data / Not too weak to support gold prices.
Supply and demand / Physical demand is not too strong at the time being.
Global Uncertainty / Brexit seems to be out of the scenario for a while.

The market is lacking conviction for higher prices. Resilience in equity markets is making gold a less attractive alternative for investors. The S&P 500 has broken above the psychological level at 2,800, and ended the week at 2824 points, up 3% from the previous week.

A potential catalyst which Brexit could bring is out of the scenario for a while. Right now there appears to be no major need for an insurance policy so investors are shunning gold and turning to equities.

The last hope is much more dovish FED. All eyes will be on the FED as it holds its monetary policy meeting next week and along with its interest rate decision will release updated economic projections. Market players are also expecting the central bank to unveil its plan to top its balance sheet reduction program.

The FED is likely to revise down the median growth projection. But I believe that the market has priced this revise already.

And one more thing: There is a risk that the Fed sounds hawkish as it downplays a potential slowdown in the domestic economy. More clear; if the Fed says that it’s downgrading its growth because of risks in the global economy or anything along those lines that could make them sound a little hawkish. This would support equity markets and put Gold prices under bearish pressure.

In any case, gold remains an attractive safe-haven asset as global economic uncertainty builds long run. If we see a significant drop on the gold prices towards $1.260 – $1.250, it would find strong buyers appetite there. On the back of slowing global economy, I don’t see a lot of reasons to be overly bearish on gold.

Technically;

I will go over the H4 Chart which we have published on Thursday. XAUUSD broke the bearish flag pattern and tested $1.292. Gold prices recovered on Friday and retested the broken line. The pattern remains valid as long as the prices fail to make H4 closing above $1.307. If Gold price breaks below $1.296, it is likely to test $ 1.290. Break below $1.290 may start a sell-off towards $1.277 and $1.269. Technical target of the formation is $1254.

On the upside, a firm breakout of $1.308 would send the price towards $ 1.320. As I mentioned in the fundamental analysis, a catalyst is needed for a sustainable bullish move.