Gold Price Falls Below $1,920 as Fed Maintains Hawkish Stance.

Introduction

In the face of hawkish interest rate projections from the Federal Reserve (Fed), the price of gold has plummeted below the significant resistance level of $1,920. This article explores the fundamental factors contributing to the decline of gold and provides technical analysis to assist traders in navigating the current market conditions.

Fundamental Overview

Gold Price Faces Selling Pressure Amid Fed’s Hawkish Outlook

Despite its efforts to hold above the key resistance level of $1,920.00 during the European session, the gold price (XAU/USD) has encountered substantial selling pressure. Fed members’ persistent hawkish outlook on interest rates has made it challenging for the precious metal to attract bets.

Fed’s Stance on Monetary Policy and Economic Outlook

Fed policymakers favor a more restrictive monetary policy due to persistent inflation caused by strong demand, despite growing concerns about the economic outlook resulting from tight credit conditions. The minutes from the Federal Reserve’s June meeting revealed policymakers’ support for additional rate increases, painting a gloomy picture for the metal markets and stabilizing gold prices after a previous slide.

Investors Seek Dollar as Safe Haven Amidst Rate Hike Expectations

Investors have increasingly turned to the dollar as their preferred safe haven, disregarding the deteriorating economy. This shift in preference is driven by the rising anticipation that the Fed will continue to hike interest rates in the near future.

Gold Technical Analysis Daily Chart

Technical Overview

Technical analysis of gold’s daily chart provides insights into its current trading patterns.

• Gold is currently trading within a down channel.
• It is positioned below the 20 and 50 Simple Moving Averages (SMA).
• The Relative Strength Index (RSI) indicates bullishness, while the Stochastic oscillator suggests no clear trend.
• Key resistance level: 1925.75
• Immediate support level: 1915.82

How to Trade Gold

A Changing Landscape for Gold Trading

After experiencing significant gains, gold’s trajectory shifted, and it began trading downwards, following a lower low-like structure. Presently, gold is trading at a support level, and if this level is breached, a further decline may be anticipated.

Trade Suggestion

To make informed trading decisions, consider the following suggestion:

• Sell at 1925.25
• Take Profit at 1914.29
• Stop Loss at 1934.86