Gold Poised for Breather Until Fed's Next Meeting

ph.investing.com/analysis/gold-poised-for-breather-until-feds-next-meeting-167126

By Satendra Singh | May 05, 2023 11:22

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The movements of gold futures since April 19, 2023, suggest that a breather may be imminent, as gold prices appear poised for a reversal. Gold futures failed to break out above the previous high of $2078, tested on March 8, 2022, and then experienced a steep decline for the next six trading sessions, ultimately reaching $1896.

Gold Futures Daily Chart; March-July, 2022

In the daily chart, gold futures may repeat these movements if they are unable to maintain immediate support at $2006 by the end of this week.

Gold Futures Daily Chart; May-July, 2023

However, a short-covering rally could occur as gold bugs become increasingly indecisive following the Fed’s recent outcome. If the gold futures are unable to sustain above the immediate resistance at $2064 on May 5, 2023, exhaustion will become apparent.

Gold Futures Weekly Chart

On the weekly chart, gold futures have formed a double top that is likely to attract big bears looking to short any rally in gold futures.

Gold futures are currently above the formation of a bullish crossover in the weekly chart but could experience sell-offs if they fail to hold above the 9 DMA at $1981.

A reversal is expected from the 18 DMA in the weekly chart, located at $1928, and a breakdown below this significant support could favor the bears.

Gold Futures Monthly Chart

In the monthly chart, gold futures have formed a bullish monthly candle, which casts doubt over the sustainability of a monthly candle formed within only four trading sessions of this month.

The Fed’s recent final verdict, announced on May 3, 2023, has raised concerns about this exaggerated move by gold futures during the first three sessions and may trigger a selling spree during this month.

This week’s closing and the upcoming week's opening levels are crucial for gold futures, as uncertainty has surged since Mr. Powell himself said that a 5% Fed Funds rate plus ongoing QT are an undoubtedly restrictive policy tool.

Coupled with banking stress and tighter credit conditions, this could create quite the cocktail.

Disclaimer: The author of this analysis may or may not have any position in the Gold futures. Readers can take any long or short trading position at their own risk.

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Gold Poised for Breather Until Fed's Next Meeting

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