Chart: Potential Trend Support Areas for Gold (XAU/USD)

Spot gold drops from record highs of $2,600 following Fed rate cut event!

Are we looking for an opportunity to increase the long-term uptrend of XAU/USD?

Let’s take a closer look at the 4-hour timeframe:

Gold (XAU/USD) 4 Hour Forex Chart by TradingView

In case you missed it, the Fed had a “crazy summer” moment and surprised some traders with a 50bps rate cut on Wednesday. Not only that, but the “Dot plot” projections indicated even more rate cuts this year and next.

However, the Fed also raised its medium-term interest rate forecasts, and JPow suggested in its press release that the next rate cut may not be less than 50 basis points.

This is probably why the US dollar has remained resilient against its peers despite the interest rate cut. XAU/USD, which has had a good September so far, jumped to a new record high of $2,600 before the bears intervened.

Remember that directional biases and market price volatility conditions are usually driven by fundamentals. If you haven’t done your homework on the US dollar and gold yet, then it’s time to check out the economic calendar and catch up on the daily fundamental news!

Are XAU/USD bulls just taking a breather?

We take a closer look at the $2,550 area which aligns with the Pivot Point line ($2,550) and the 38.2% Fibonacci retracement of gold’s most recent rally.

If the long wicks on the 4-hour chart lead to green candlesticks and steady trading above $2,550, then XAU/USD could generate enough buying pressure to retest the previous highs of $2,600.

If you anticipate a deeper pullback in gold prices, we can also consider a possible trip to the $2,525 area near the S1 pivot point ($2,514), the 61.8% Fib retracement and previous resistance levels.

A pullback to the lower potential support area would provide a better entry price for those expecting XAU/USD to make new monthly highs in the next few weeks.

Of course, we do not give up on a bearish turn that gains momentum and leads to a long decline.

Watch for more bullish candlesticks and consistent trading below the mid-channel support area, which could lead to a retest of the previous lows near $2,500.

Remember to practice proper risk management and be aware of top market catalysts when trading it. Luck!