Article by: ETO Markets

The markets continue to believe that the Fed will start decreasing rates as early as the June policy meeting. This could keep the price of gold from falling too much and serve as a floor, along with the current geopolitical tensions. Ahead of the two-day FOMC monetary policy meeting, traders may also choose to sit it out. Investors will be watching for new signals regarding the route of rate cuts when the Fed makes its announcement on Wednesday. These signals will be crucial in determining the direction of the USD and will provide the precious metal some much-needed momentum.

The 23.6% Fibonacci retracement of the bullish run near $…, is where buyers were encountered by XAU/USD, according to the daily chart. The same chart indicates that sellers appear to have no influence as technical indicators have corrected excessive readings and turned flat around overbought levels. Moving averages also develop at a significant distance below the current level, with the 20-SMA traveling north nearly vertically above the longer ones at the same time.

The 4-hour chart indicates that there appears to be little near-term positive potential. The longer moving averages point sharply north, much below the present level, but XAU/USD is meeting sellers at about a flat 20-SMA. At neutral levels, however, technical indicators are weakly directional.