Spot gold continues to trend lower and extend pullback from last week’s high at $2070 to the lowest in nearly two weeks in early European session on Tuesday.
Fresh optimism about ceasefire talks in Ukraine, although the latest round of negotiations did not give expected results, offsets fears of further escalation of the conflict.
The yellow metal is also weighed down by expectations for Fed rate hike, as today the US central bank starts its two-day policy meeting.
Markets widely expect raise of interest rates by 0.25%, for the first time since pandemic, though the number of those who expect more aggressive action and 0.5% hike, continues to rise, with such scenario, expected to increase the headwinds to the yellow metal.
Technical studies on daily chart continue to weaken and support the notion of deeper pullback that would also confirm another false break above $2000 level, after the action in Aug 2020.
Monday’s close below pivotal Fibo support at $1959 (38.2% of $1780/$2070 upleg) generated bearish signal, with strong loss of bullish momentum, adding to negative outlook.
Bears cracked 50% retracement of $1780/$2070 ($1925) with break here to risk dip towards $1900 (round-figure) and $1890 (Fibo 61.8%).
Broken Fibo support at $1959 marks solid resistance, followed by 10 DMA ($1974) and repeated daily close below $1959 is needed to confirm negative signal and keep bears in play.
Res: 1954; 1959; 1974; 1990
Sup: 1925; 1914; 1900; 1890
