Gold climbs to over two-week high amid the post-FOMC USD selling, focus shifts to US GDP

• Gold scales higher for the second successive day and climbed to over a two-week high.
• The post-FOMC USD selling bias remains unabated and is offering support to the metal.
• Rebounding US bond yields, the risk-on impulse could cap gains ahead of the US Q2 GDP.

Gold builds on the overnight goodish rebound from the $1,711 area, or a multi-day low, and gains some follow-through traction for the second successive day on Thursday. The positive move lifts the XAU/USD to over a two-week high during the early European session, with bulls now awaiting sustained strength beyond the $1,745-$1,750 strong resistance zone.

The US dollar prolongs the previous day's less hawkish FOMC-inspired decline and slips to its lowest level since July 6. This, in turn, is offering some support to the dollar-denominated gold. During the post-meeting press conference, Fed Chair Jerome Powell signalled that another large adjustment could be coming at the next policy meeting in September, but it would be dependent on the incoming data.

Furthermore, the Fed officials also acknowledged that economic indicators have softened and noted signs of a slowdown. This suggests that the US central bank would slow the pace of its interest rate hikes, which continued weighing on the greenback. That said, a goodish rebound in the US Treasury bond yields is acting as a tailwind for the buck and might keep a lid on the non-yielding gold, at least for the time being.

Apart from this, the risk-on impulse - as depicted by a generally positive tone around the equity markets - could further contribute to capping gains for gold. Even from a technical perspective, the $1,745-$1,750 region has been acting as a stiff resistance since the early part of July. This further makes it prudent to wait for strong follow-through buying before positioning for any further near-term appreciating move.

Market participants now look forward to the US economic docket, highlighting the release of the Advance Q2 GDP report later during the early North American session. The world's largest economy is expected to have grown by 0.4% annualized pace during the April-June period and avoid a technical recession. This would validate the Fed's view that the US economy isn't currently in a recession and provide a modest lift to the USD.

This, along with the US bond yields, would influence the USD price dynamics and drive the XAU/USD. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around gold.

Technical levels to watch