Gold: Signs of bullish exhaustion ahead of the Fed


  • Gold is looking heavy with Friday's candle signaling buyer exhaustion.
  • A close below $$1,338 would validate Friday's candle with a long upper wick.
  • Markets to continue paring back rate cut bets ahead of Wednesday's Fed rate decision.

Gold's rally seems to have run its course with signs of bullish exhaustion emerging on technical charts ahead of Wednesday's FOMC (Federal Open Market Committee) rate decision.

The yellow metal is currently trading at $1,339 per Oz, representing 0.14 percent losses on the day, having hit a high of $1,358 on Friday - a level last seen in April 2018.

Notably, the rise to 14-month highs was short-lived with prices closing largely unchanged at $1,341 on Friday. Essentially, the yellow metal created a candle with long upper shadow on Friday - a sign of buyer exhaustion. 

A bullish-to-bearish trend change would be confirmed if gold prices validate Friday's candlestick with a close below $1,338 today. That looks likely as Friday's upbeat US retail sales dispelled the need for an immediate rate cut. The market, therefore, could continue to pare back its July rate cut expectations ahead of the Fed, keeping the US dollar better bid.

The US central bank is expected to keep rates unchanged at 2.5% this week. While recent soft economic data have boosted rate cut expectations, Goldman Sachs believes the markets have overpriced rate cuts and the central bank will stand pat for the rest of the year.

Technical levels

XAU/USD

Overview
Today last price 1338.96
Today Daily Change -2.97
Today Daily Change % -0.22
Today daily open 1341.93
 
Trends
Daily SMA20 1307.94
Daily SMA50 1294.09
Daily SMA100 1301.28
Daily SMA200 1268.78
Levels
Previous Daily High 1358.2
Previous Daily Low 1338.2
Previous Weekly High 1358.2
Previous Weekly Low 1319.99
Previous Monthly High 1306.9
Previous Monthly Low 1266.35
Daily Fibonacci 38.2% 1345.84
Daily Fibonacci 61.8% 1350.56
Daily Pivot Point S1 1334.02
Daily Pivot Point S2 1326.11
Daily Pivot Point S3 1314.02
Daily Pivot Point R1 1354.02
Daily Pivot Point R2 1366.11
Daily Pivot Point R3 1374.02

 

 

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