XAUUSD rebounds after reaching one-week low at $2326.78

Gold has rebounded moderately, with XAUUSD bulls now trying to get back above the 21-period SMA.

Yesterday's ~2% drop to a one-week low came after the release of the FOMC minutes, which hinted at the possibility of keeping rates higher for longer, and a lower-than-expected initial jobless claims reading (215K - actual, 220K - expected), suggesting a hotter labor market.
 

Some Fed officials have even mentioned a desire to tighten policy if deemed necessary to bring inflation down to target levels.

However, during his press conference on May 1st, Fed Chairman Jerome Powell stated that the Fed is unlikely to return to raising interest rates.

Higher interest rates could strengthen the US dollar, while potentially pushing zero-yielding gold lower. Currently, the markets are pricing in a 59.2% probability of a September rate cut.

Technical outlook

The XAUUSD is trading above both its 50 and 100-period SMAs, indicating strong bullish potential in the medium and long term.

However, the 21-period SMA may be a strong resistance/target level for the bulls in the near term.

A break above the 21-period SMA could push the price higher towards the psychologically important $2400 level.

On the downside, the 50-period SMA will provide immediate support if the gold bears attempt to regain the initiative.

The neutral position of the Relative Strength Index (RSI) underlines the market's current state of uncertainty (<30 - oversold, >70 - overbought) as investors await more clarity on the future of interest rate policy.