Gold was retreating from March until November last year, after peaking above $2,000, as the FED and other major central banks raised rates in a frenzy. But, reversed higher as central banks started to slow and soften the rhetoric, with the global economy heading into a recession.

XAU/USD has been making some decent gains and pushed to $1,950 late last week. But, we saw a reversal yesterday and sellers pushed the price below the 50 SMA (yellow) on the H4 chart which has been acting as the ultimate support indicator.

GOLD and Silver prices dived lower yesterday as the sentiment turned negative, particularly in the US session, while the USD rallied higher. Although this seems like a corrective pullback and some mild profit taking from the futures traders ahead of this week’s highly anticipated monetary policy meeting of the FED tomorrow and on Thursday we also have the ECB and the BOE meetings and rate decisions.

Gold H4 Chart – Sellers Pushing the Price Below the 50 SMA

Will the 100 SMA (green) hold as support again?

Although, more than the rate hikes themselves, traders are worried about the future of the monetary policy. There were expectations earlier that the FED would slow further with rate hikes and eventually stop, while reversing back down toward the end of the year. But that is not so certain now as the US economy is showing signs of holding up.

The main economic event of the week from the US is the Federal Reserve Open Market Committee (FOMC) meeting on Wednesday evening, although the statement and the press conference from chairman Powell will be more important. Most believe the FED will raise the key interest rate by 25 basis points, following the recent 0.5 bps hike in December. Stock markets retreated lower yesterday, with US indices leading the way, so risk sentiment is negative ahead of the meeting, which weighed on Gold prices as well. So, we will see where Powell will direct us, which will be the main driver for Gold in the coming weeks.

Gold XAU Live Chart