Gold is sitting at a three-month low price of just above 1850$. XAUUSD could potentially move to the upside as the last dance, ahead of the Federal Reserve meeting and a potential .50bp rate hike on Wednesday, May 4. The US dollar, currently trading right above 103.4, could extend its correction further, assuming investors will reposition their positions ahead of the Fed event. Additionally, market sentiment during the last week wasnt encouraging for the greenback due to the downbeat US ISM and S&P Global Manufacturing PMI report, leading to fear of the US being one step before the recession, something which is kept in mind by the FOMC, as the committee looks to embark on quantitative tightening (QT) in 2022. In turn, that may keep the price of Gold under pressure if the central bank delivers the aforementioned .50bp rate hike, as that reduces risk appetite to prop the price of Gold and provides the Fed with additional steps to control inflation.
With all that in mind, the price of Gold may face a further decline over the coming days as the former resistance zone around the November high ($1877) failed to act as support, and the RSI may show the bears gaining momentum and on the edge of pushing into oversold territory for the first time in 2022. If the $1,850 level gives way amid a selling resurgence, then a sharp sell-off towards the rising 200-DMA at $1,834 will be inevitable. In short, with the hawkish attitude of the Fed, any recovery attempts at the price of Gold are likely to be temporary.
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