Gold trades below 50-DMA of $1253


Gold is trading below the 50-DMA level of $1253 after failing near $1264. 50 (38.2% Fib R of April high - May low) on Tuesday. 

Eyes Fed minutes

The minutes of the last Fed meeting due today are widely expected to reinforce the market’s expectations for June tightening. Bloomberg outs the probability of a 25 basis point rate hike in June at 95%, while the CME's model says it is about 83% discounted. 

The minutes are also expected to show some detail of Fed discussions on how it plans to reduce its $4.5 trillion balance sheet. One may expect a big drop in gold if the minutes make a strong case in favour of starting the process of reduction in the balance sheet size later this year. 

This is perhaps the biggest story in the last three years and the markets somehow have not taken it seriously enough, which is evident from the recent broad based sell-off in the US dollar. 

Gold Technical Levels

A break below $1245.36 (38.2% Fib R of Apr high - May low) could yield a sell-off to $1239.88 (Mar 31 low) and $1233.53 (23.6% Fib R of Apr high - May low). On the other hand, a break above $1253 (50-DMA) would open up upside towards $1264.50 (61.8% Fib R of Apr high - May low) and $1270.94 (Apr 7 high). 

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Strongly Bearish Neutral Shrinking
1H Bullish Neutral High
4H Bearish Oversold Expanding
1D Bearish Neutral Expanding
1W Strongly Bearish Neutral Shrinking


 

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