Gold is below 2,300.00

Source: Dukascopy Bank SA


On May 1, US monetary policy makers, who decide upon the supply of the US Dollar, announced the Federal Funds Rate. The rate is used as a base rate for all USD denominated debt. The Fed has kept the interest rate unchanged at 5.50%, as the financial markets expected. In addition, the central bank has published the Federal Open Markets Committee Statement. The statement reveals the basing of the decision by the committee that decides upon the policy. The initial reaction to the news was a dip of the USD, as the Fed had reduced the balance sheet redaction to $300 billion from $720 billion when the program was started in 2022.

However, most price action occurred during the follow up press conference at 18:30 GMT up to 19:30 GMT. The press conference is more notable due to the Chairman of the Federal Reserve taking journalist questions. If the journalists do their job properly, they get more information out of the Chairman about the future supply and value of the USD.

In general, the Chairman said that the Fed is not thinking to do anything. It would take a lot of bad economic data for the Fed to cut interest rates. Meanwhile, potential hikes would take a lot higher than current inflation. Moreover, the Chairman expressed that inflation should decrease when the winter passes and shelter costs decrease. Namely, as people spend less for heating, inflation numbers are set to go down.

The comments managed to push the metal up to the combined resistance of the 2,330.00 level and the 200-hour simple moving average. However, up to mid-Thursday, the resistance levels had held twice, as the metal fails to recover. At mid-day, the price passed below 2,300.00 and more losses appeared to be upcoming.

The decline could look for support in Wednesday's low level at 2,280.00. Further below, there is an April low and high level range at 2,265.00/2,268.00. Below this zone, the 2,250.00 has shown to be capable of impacting the metal. If all of these fail, the 2,225.00/2,230.00 range will come into play, before the 2,200.00 mark is reached.

However, if there is a sudden run to safety in the markets, prices for gold would surge. The metal would then face the 2,300.00 and the 50-hour SMA as resistance. Higher above the 100 and 200-hour simple moving averages are set to act as resistance near 2,320.00. Further above, watch the marked zones that could act as resistance and support after being broken.
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