Gold Price Analysis: XAU/USD slides into $1850s, now down over 2.0% on the day

Spot gold has extended on earlier losses and is now trading in the upper $1850s, down more than 2.0%.
As focus turns to upcoming US data and Wednesday’s Fed meeting, profit-taking is seemingly weighing on XAU/USD.
Some are also citing downside in global energy and metal markets as reducing the demand for inflation protection.

Joel Frank Independent Analyst

Ahead of the release of April US ISM Manufacturing PMI data that will probably show a continued robust pace of expansion in US industry last month, spot gold (XAU/USD) prices continue to trade on the back foot. Indeed, a fall in prices that had begun during Asia Pacific trade accelerated in the run-up to the US open, with the precious metal recently breaking below key support in the $1875 and extending losses into the upper $1850s.

At current levels around $1857, XAU/USD now trades with on the day losses of over 2.0%. No specific piece of news or fundamental catalyst can be pinned down as behind the latest drop. Instead, analysts and market commentators have on Monday been talking about how nerves ahead of what is likely to be a very hawkish Fed meeting on Wednesday, as well as a barrage of tier one US data releases, is encouraging profit-taking in gold markets.

The Fed is expected to lift interest rates by 50 bps, announce quantitative tightening plans and signal more 50 bps at upcoming meetings, with the bank aiming to get interest rates back to around 2.5% by the year’s end. Higher interest rates increase the “opportunity cost” of holding non-yielding assets like gold and typically weigh on its demand.

Elsewhere, market commentators also cited sharp downside in global energy and metal prices as weighing on demand for gold via a reduced need for inflation protection. Crude oil and copper markets, to take to key examples, have cratered on Monday amid concerns about growth in China following ugly April PMI data over the weekend. XAU/USD bears will now likely target a test of resistance turned support in the $1850 area ahead of a potential test of the 200-Day Moving Average in the $1830s.

XAU/Usd

Overview
Today last price	1857.83
Today Daily Change	-39.04
Today Daily Change %	-2.06
Today daily open	1896.87

Trends
Daily SMA20	1935.45
Daily SMA50	1938.09
Daily SMA100	1877.14
Daily SMA200	1833.7

Levels
Previous Daily High	1920.02
Previous Daily Low	1892.62
Previous Weekly High	1934.44
Previous Weekly Low	1872.24
Previous Monthly High	1998.43
Previous Monthly Low	1872.24
Daily Fibonacci 38.2%	1909.55
Daily Fibonacci 61.8%	1903.09
Daily Pivot Point S1	1886.32
Daily Pivot Point S2	1875.77
Daily Pivot Point S3	1858.92
Daily Pivot Point R1	1913.72
Daily Pivot Point R2	1930.57
Daily Pivot Point R3	1941.12

Author

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD off tops, back to 1.1400

EUR/USD now loses some momentum and recedes from the area of recent daily tops, revisiting the 1.1400 neighbourhood in the latter part of Tuesday session. The pair’s daily decline comes in response to the resurgence of some buying interest in the US Dollar.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.