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

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