Gold trades below 50-DMA of $1253

Omkar Godbole FXStreet Contributor

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
Updated May 24, 02:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.