Gold Price Forecast: Traders eye the FOMC minutes as key risk event

• Gold prices are attempting to recover from a daily perspective. 
• The US dollar is also firming as traders position for the FOMC minutes.

Gold prices were ending higher overnight as risk-off tone saw investor demand for the safe-haven. Further

However, gold has been under slight pressure since dropping from the highs and is now consolidating on Wednesday.

XAU/USD is starting out flat after falling from the highs of the prior day of $1,815.04 and dropping to close on Wall Street at $1,797.21, albeit up from the lows of $1,790.15. 

Declines in inflation-adjusted Treasury yields have also provided some support.

The greenback resurged on Tuesday following the long weekend in the US as investors got beyond the Nonfarm Payrolls mixed report.

The dollar stayed on top even though US services ISM survey fell to 60.1 (vs. estimates of 63.5, prior 64.0). 

Instead, the greenback was firmer as traders positioned themselves ahead of Wednesday's Federal Reserve minutes from the pivotal June meeting where first taper discussions took place.

The market is awaiting more confirmation clues of the opinions of FOMC members on when tapering will begin. A more hawkish spin within the minutes from the members would be expected to support the greenback higher, especially in the wake of disappointing data from Europe on Tuesday. 

The dollar pretty much reclaimed all of the losses and which have been put down to profit-taking overnight.

DXY daily chart

Friday's high in the DXY near 92.741 is still intact but on a break of there, bulls will be hunting down the 93 areas ahead of the March 31 high near 93.437.  

Traders will be on the lookout for a more hawkish spin from the Fed members.

The US dollar could firm further, especially in the wake of disappointing data from Europe on Tuesday which tarnished the allure for the euro ( by far, the largest component of the DXY index, making up almost 58 per cent (officially 57.6%) of the basket).

Meanwhile, however, analysts at TD Securities remain bullish.

''Following a multi-month hiatus, Central Banks have proven to be a crucial pillar of support for gold's bull market at much needed time in recent months, with an increase in official purchases coinciding with periods in which gold trades near its pandemic-era trendline,'' the analysts explained.

''As the world exits from the pandemic with a massive stock of debt, alongside closer coordination between governments and their respective central banks, nations may increasingly seek to add to their gold reserves.'' 

Gold technical analysis

Technically, the 1,808 level was taken out as being the 38.2% Fibo of the last daily bearish impulse which has a confluence with the 13th May lows.

This leaves scope for higher yet and to fill in the daily wick that has been left for Wednesday’s trade.

1,845  is the 61.8% Fibo as a key upside target. 1,785 is the critical support at this juncture.