Gold Remains Stuck Near The $1915 Level

Key Insights

• Treasury yields keep moving higher, which is bearish for gold. 
• The Fed Interest Rate Decision and the subsequent commentary will have a material impact on gold markets.
• A move below $1915 will push gold towards the $1900 level.

Traders Are Cautious Ahead Of Fed Interest Rate Decision

Gold continues its attempts to settle below the support at $1915 as traders hope for more progress in Russia – Ukraine negotiations.

Demand for riskier assets continues to grow, and S&P 500 futures are up by more than 1% in premarket trading. Meanwhile, traders rush out of safe-haven assets like U.S. dollar and U.S. government bonds, pushing Treasury yields higher.

The yield of 10-year Treasuries is currently trying to settle above the 2.15% level, while the yield of 30-year Treasuries is testing the psychologically important 2.50% level.

Higher yields are bearish for gold and other precious metals that pay no interest, and the continuation of the current trends in the U.S. government bond markets may put more pressure on gold.

However, it should be noted that gold has already declined by more than 7% from its recent highs, so speculative traders may see the strong pullback as an opportunity to establish a position in gold.

Today, the Fed will announce its Interest Rate Decision and provide commentary, which will have a material impact on the market’s expectations for the interest rate trajectory. Fed’s comments will likely have a strong impact on markets, so trading in the gold markets may stay choppy ahead of this key event.

Technical Analysis

Gold is trading near the support level at $1915. If gold manages to settle below this level, it will move towards the next support level, which is located at $1900.

A successful test of the support at $1900 will push gold towards the support at the 50 EMA at $1890. In case gold declines below the 50 EMA, it will head towards the next support at $1870.

On the upside, the nearest resistance level for gold is located at the 20 EMA at $1935. If gold gets back above this level, it will move towards the resistance at $1950. A successful test of the resistance at $1950 will open the way to the test of the next resistance at $1975.

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