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The price of gold is approaching a low after a reversal before the 50-day SMA


Topics to talk about the price of gold

The the price of gold traded to a new monthly low ($ 1,805) as U.S. Treasury yields push to new annual highs, and the Federal Reserve’s interest rate decision could keep the precious metal under pressure as the central bank is expected to raise the rate by 50 bp.

The price of gold is approaching a low after a reversal before the 50-day SMA

The price of gold seems to have turned course after failed to push back above the 50-day SMA ($ 1878), and the precious metal can track the negative slope in the moving average when the relative strength index (RSI) captures an upward trend carried over from the previous month.

Weakness in precious metals prices may persist as major central banks normalize monetary policy over 2022. Federal Open Market Committee The rate decision (FOMC) could cause a headwind for bullion as the central bank insists that “Increasing the target range by 50 basis points is likely to be appropriate at subsequent meetings.

As a result, the FOMC is likely to signal a further rise in U.S. interest rates as the central bank warns that “restrictive policies may be appropriate”And the committee can prepare U.S. households and businesses to tighten the cycle as US Consumer Price Index (CPI) rises to its highest level since 1981.

In turn, an update of the Economic Forecast Summary (SEP) may reveal a shift in leadership forward for monetary policy if the chair Jerome Powell and Co. demonstrate a strong willingness to push the Fed’s rate above neutral, and efforts to curb inflation may continue to weaken the attractiveness of gold as U.S. yields push for new annual highs.

That said, the price of gold may continue to cut a number of lower highs and lows, as the RSI may not maintain its upward trend from last month, and the FOMC rate decision may push the price of gold aside May Minimum ($ 1,787) if the central bank demonstrates a greater willingness to pursue restrictive policies.

Daily gold price chart

Image of the daily price chart for gold

Source: Trade view

  • Keep in mind, tThe price of gold seemed to be on the way to check the annual low ($ 1779) last month since it trades below the 200-day SMA ($ 1843) for the first time since February, but the rise from the May low ($ 1787) pushed the precious metal back above the moving average since Relative Strength Index (RSI) the tendency to growth developed.
  • However, the RSI stalled on an uptrend as the 50-day SMA ($ 1,878) developed a negative tilt and the precious metal unfolded ahead of the moving average after failing to close above the level $ 1876 (50% rollback) region.
  • Break / close below $ 1,816 (up 61.8%) the area increases the field for the test May minimum ($ 1787)with lower movement annual minimum ($ 1779) Fibonacci discoveries overlapped by about $ 1762 (78.6% expansion) to $ 1771 (23.6% rollback).

— Written by David Song, currency strategist

Follow me on Twitter at @DavidJSong


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