⚡Crypto Alert : Altcoins are up 28% in just last month! Unlock gains and start trading now - Click Here

Gold Slips Under $1,962 - Is It a Good Time to Short XAU/USD?

Gold Slips Under $1,962 – Is It a Good Time to Short XAU/USD?

Posted Thursday, April 21, 2022 by
Skerdian Meta • 2 min read

Gold (XAU/USD) has made a modest recovery after falling to $1,939.40 on Wednesday, aided by a drop in the US dollar index (DXY). Gold prices have recovered from their previous consolidation zone, which occurred within a narrow range of $1,915.08-1,944.64. The DXY has dropped after failing to hold above the resistance level of 101.00, falling nearly 0.80 percent from its recent high of 101.04 on Wednesday.

It is worth noting that market participants have discounted the worst-case scenarios that could be dictated by the Federal Reserve’s (Fed) monetary policy announcement in May. Investors have priced in a jumbo rate hike, balance sheet reduction, and aggressive hawkish guidance for the rest of the year, causing the yellow metal to fall significantly. Meanwhile, 10-year US Treasury yields have fallen to 2.83 percent after failing to break through the psychological resistance level of 3 percent. Going forward, the focus will be on Fed Chair Jerome Powell’s speech, which is scheduled for Thursday. Market participants will look for clues about the likely monetary policy action in May.

Meanwhile, the Fed continued to speak on Wednesday. Charles Evans, President of the Federal Reserve Bank of Chicago, who has been 3 for 3 in hitting the newswires this week, stated that inflation would not return to 2.0 percent in 2023. These remarks were in addition to his comments on Tuesday when he pushed back on a 75 basis point increase proposed by St. Louis Fed President Bullard.

XAU/USD

Overall, however, some Fed officials are sounding a little more cautious, according to BBH analysts. For example, they cited Evans’ comments, which also noted that there is considerable uncertainty about how inflation will play out this year, arguing for a more cautious monetary policy path this year. The analysts also stated that the Fed’s Raphael Bostic stated that it is critical to reach a neutral Fed Funds rate “as soon as possible,” and that neutral is likely to be between 2.0-2.5 percent. ” Bostic also stated that he expects the Fed Funds rate to be around 1.75 percent by the end of the year. While not exactly dovish, these two take a more cautious approach that contrasts sharply with Bullard’s. ”

Looking ahead, Fed Chair Powell will participate in a panel discussion on the global economy with ECB President Lagarde at the IMF tomorrow. This is the last we’ll hear from him until his post-decision press conference on May 4 in the afternoon. It’s also worth noting that the media blackout ahead of the FOMC meeting begins at midnight Friday, and there will be no Fed speakers until the rate decision is announced.

Gold (XAU/USD) Technical Outlook

On a daily timeframe, XAU/USD has repeatedly attempted to break through its previous critical level of $1,966.18 set on March 24. The 20- and 50-day Exponential Moving Averages (EMAs) rise, contributing to the upward filtering. The momentum oscillator Relative Strength Index (RSI) (14) has surpassed 60.00, indicating that bullish momentum will be stronger in the future.

Gold was trading with a bullish bias at $1,984 on Monday, having recovered from the 1,968 support level. Candles above this level have the potential to propel an uptrend to 2,000 or even 2,009 levels. At the same time, the support levels of $1,968 and $1,944 remain unchanged. The RSI and MACD both point to an uptrend. As a result, look for buy trades above $1,968 and vice versa. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments