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Gold Heading for the 100 SMA After Breaking the $1,950 Support

May 26, 2023

NEW YORK (May 26) Gold made a bearish reversal early this month after being bullish since November last year. Buyers failed to make a new all-time high and the price reversed back down. The 50 SMA was broken last week and it turned into resistance immediately, showing that the selling pressure is strong.

So, the Gold market has been experiencing bearish momentum. On the daily timeframe, the bearish move of the past week and a half sent the price to the $1,950 support area. That zone held last week and we saw a bounce but after the rejection below the 50 SMA Gold has broken the support zone.

The ongoing lack of agreement among US policymakers regarding the US debt ceiling has been weighing on the market and causing price fluctuations. Recently, Fitch Ratings Agency placed the US ‘AAA’ Long-Term Foreign-Currency Issuer Default Rating (IDR) on Rating Watch Negative, adding further pressure for policymakers to reach a resolution. House Representative Kevin McCarthy expressed some positivity during a press conference while ruling out tax increases on the wealthy and confirming that concessions have already been made.

The release of the Federal Reserve minutes failed to provide additional clarity on US monetary policy, following several hawkish comments from policymakers in recent times. The minutes revealed that policymakers do not have a consensus on whether to continue raising interest rates or to pause at this stage. Today we have the PCE (Personal Consumption Expenditures) price index data and further ahead another Consumer Price Index (CPI) release before the FED’s June meeting could be crucial in determining the central bank’s next policy steps.

Overall, the Gold market remains in a state of uncertainty due to the US debt ceiling concerns, and the ambiguity surrounding US monetary policy. It’s important to monitor key economic data and developments in order to gain a clearer understanding of future market trends.

FXLeaders

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