GOLD looks vulnerable on hawkish Fed expectations, USD demand
Gold consolidates in monthly lows around $5,000 early Tuesday, as focus shifts to the Fed policy verdict.
The US Dollar finds fresh haven demand as the Middle East war drags on; Strait of Hormuz reopening hopes fade.
Technically, Gold eyes a sustained break below the 50-day SMA at $4,965 as RSI stays bearish.
Gold is in a bearish consolidation phase near the monthly lows, while battling the $5,000 level early Tuesday.
Amid renewed haven demand for the USD and increased expectations that the US Fed could turn hawkish on Wednesday keep the bearish pressures intact on Gold.
Furthermore, markets remain worried about the persistence of oil supply disruption globally as European countries ruled out sending warships to the Strait of Hormuz, despite threats from US President Donald Trump that NATO faces “a very bad future” if members fail to help reopen the vital waterway.These geopolitical developments concerning the Middle East war rekindle safe haven flows into the Greenback.
Additionally, the USD also receives support from diminishing bets that the Fed could cut interest rates later this year. Markets are expecting the Fed to keep the policy rates unchanged for the next three meetings.
Gold could also face some headwinds from the widely expected interest rate hike from the Reserve Bank of Australia on Tuesday as the central bank looks to beat the energy-driven inflation shock.
However, the downside appears cushioned as ‘dip-buying’ remains in play as investors still have some faith left in the traditional store of value, Gold, as uncertain times persist due to the Middle East conflict.
Looking ahead, Gold traders will continue to remain at the mercy of the Middle East headlines and the price action in the USD and Oil prices as the Fed kicks off its two-day monetary policy meeting later this Tuesday.
Daily technical analysis
The near-term bias is mildly bullish as price holds above the rising 21-day and 50-day SMAs, while the 100- and 200-day SMAs trend below and higher, outlining a well-established broader uptrend. The latest candles stabilise just above the 50% Fibonacci retracement at $4,999.94 measured from the $4,401.99 low to the $5,597.89 high, suggesting dip buyers defend this mid-range area. The RSI near 47 stays close to the neutral band, indicating momentum has cooled but not flipped decisively in favour of sellers.
Initial support emerges at the 38.2% retracement at $4,858.82, where the 50-day SMA trades nearby to reinforce this downside cushion. A break below that zone would expose the $4,684.22 area, aligning with the 23.6% retracement as the next notable floor within the broader bullish structure. On the upside, immediate resistance stands near the recent congestion around $5,080, ahead of stronger supply at the 61.8% retracement at $5,141.05. A daily close above $5,141 would reopen the path toward the $5,342 region, where the 78.6% retracement is located and where buyers would need to extend gains to revive a test of the $5,598 high.
GOLD looks vulnerable on hawkish Fed expectations, USD demand
Gold is in a bearish consolidation phase near the monthly lows, while battling the $5,000 level early Tuesday.
Amid renewed haven demand for the USD and increased expectations that the US Fed could turn hawkish on Wednesday keep the bearish pressures intact on Gold.
Furthermore, markets remain worried about the persistence of oil supply disruption globally as European countries ruled out sending warships to the Strait of Hormuz, despite threats from US President Donald Trump that NATO faces “a very bad future” if members fail to help reopen the vital waterway.These geopolitical developments concerning the Middle East war rekindle safe haven flows into the Greenback.
Additionally, the USD also receives support from diminishing bets that the Fed could cut interest rates later this year. Markets are expecting the Fed to keep the policy rates unchanged for the next three meetings.
Gold could also face some headwinds from the widely expected interest rate hike from the Reserve Bank of Australia on Tuesday as the central bank looks to beat the energy-driven inflation shock.
However, the downside appears cushioned as ‘dip-buying’ remains in play as investors still have some faith left in the traditional store of value, Gold, as uncertain times persist due to the Middle East conflict.
Looking ahead, Gold traders will continue to remain at the mercy of the Middle East headlines and the price action in the USD and Oil prices as the Fed kicks off its two-day monetary policy meeting later this Tuesday.
Daily technical analysis
The near-term bias is mildly bullish as price holds above the rising 21-day and 50-day SMAs, while the 100- and 200-day SMAs trend below and higher, outlining a well-established broader uptrend. The latest candles stabilise just above the 50% Fibonacci retracement at $4,999.94 measured from the $4,401.99 low to the $5,597.89 high, suggesting dip buyers defend this mid-range area. The RSI near 47 stays close to the neutral band, indicating momentum has cooled but not flipped decisively in favour of sellers.
Initial support emerges at the 38.2% retracement at $4,858.82, where the 50-day SMA trades nearby to reinforce this downside cushion. A break below that zone would expose the $4,684.22 area, aligning with the 23.6% retracement as the next notable floor within the broader bullish structure. On the upside, immediate resistance stands near the recent congestion around $5,080, ahead of stronger supply at the 61.8% retracement at $5,141.05. A daily close above $5,141 would reopen the path toward the $5,342 region, where the 78.6% retracement is located and where buyers would need to extend gains to revive a test of the $5,598 high.
Categories
Recent Posts
GOLD risks pullbacks amid oversold conditions, Gulf war
GOLD crumbles as Gulf war escalates; is a turnaround coming?
GOLD rebounds as Middle East war escalates, but not out of woods yet
LIKE THIS ARTICLE? SHARE IT!
Ready to trade?
Unleash your trading skills with your Maxain account today!
Easy funding & withdrawals
No deposit fees