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.

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