Gold Price Could Correct Further Lower, Fed Decision Next
- Gold price started a downside correction from the $1,900 resistance zone.
- It broke a key bullish trend line with support near $1,872 on the 4-hours chart.
- EUR/USD and GBP/USD are struggling below 1.2180 and 1.4200 respectively.
- The Fed Interest Rate Decision is lined up for today (forecast- no change from 0.25%).
Gold Price Technical Analysis
After struggling to settle above $1,900, gold price started a fresh decline against the US Dollar. The price broke the key $1,880 support zone and it is now showing a few bearish signs.
The 4-hours chart of XAU/USD indicates that the price topped near $1,903 before correcting lower. There was a break below the $1,880 support level and the 100 simple moving average (red, 4-hours).
Besides, there was a break below a key bullish trend line with support near $1,872. The price even spiked below $1,850 and the 200 simple moving average (green, 4-hours). It traded as low as $1,844 before starting a consolidation phase.
On the upside, an initial resistance is near the $1,870 level. The first major resistance is near the $1,890 level and the 100 SMA. The main resistance is now forming near the $1,900 level.
On the downside, the $1,844 level is a decent support. Any more losses could spark a move towards the $1,820 level. The next key support is near the $1,800 level.
Fundamentally, the US Retail Sales report for May 2021 was released yesterday by the US Census Bureau. The market was looking for a decline of 0.8% in sales compared with the previous month.
The actual result was lower than the forecast, as the US Retail Sales declined 1.3% in May 2021 (MoM). However, the last reading was revised up from 0% to +0.9%.
Overall, gold price remains at a risk of more losses below $1,840 ahead of the key fed rate decision. Similarly, EUR/USD and GBP/USD are struggling to climb above 1.2180 and 1.4200 respectively.
Economic Releases to Watch Today
- UK Consumer Price Index for May 2021 (YoY) – Forecast +1.8%, versus +1.5% previous.
- UK Core Consumer Price Index for May 2021 (YoY) – Forecast +1.5%, versus +1.3% previous.
- Fed Interest Rate Decision - Forecast 0.25%, versus 0.25% previous.
- Canadian Consumer Price Index for May 2021 (MoM) – Forecast +0.4%, versus +0.5% previous.
- Canadian Consumer Price Index for May 2021 (YoY) – Forecast +3.5%, versus +3.4% previous.