Gold Price Eyes December Low as RSI Flirts with Oversold Territory

Gold Price Talking Points

The value of gold seems to be monitoring the adverse slope within the 50-Day SMA ($1840) as it trades to a contemporary yearly low ($1764), and bullion might try to check the December low ($1753) as the Relative Strength Index (RSI) flirts with oversold territory.

Gold Price Eyes December Low as RSI Flirts with Oversold Territory

Gold now echoes the weak spot throughout valuable steel costs as it fails to defend the January low ($1779), and the RSI might present the bearish momentum gathering tempo if the oscillator manages to push into oversold territory for the primary time since final 12 months.

It appears as although rising rates of interest will proceed to sap the attraction of gold as the Federal Reserve pledges to additional normalize financial coverage over the rest of the 12 months, and bullion might face further headwinds forward of the subsequent Federal Open Market Committee (FOMC) charge choice on July 27 as the central financial institution is extensively anticipated to ship one other 75bp charge hike.

In truth, the CME FedWatch Tool at the moment exhibits a better than 80% likelihood of seeing the FOMC improve the benchmark rate of interest to a contemporary threshold of two.25% to 2.50% later this month, and it appears as although the Fed will step up its effort to fight inflation as Chairman Jerome Powell and Co. present a better willingness to implement a restrictive coverage.

As a end result, the FOMC might carry its climbing cycle into 2023 as a rising variety of Fed officers venture a steeper path for US rates of interest, and the worth of gold might proceed to commerce to contemporary yearly lows over the near-term as it seems to be monitoring the adverse slope within the 50-Day SMA ($1840).

With that mentioned, the worth of gold might try to check the December low ($1753) forward of the subsequent Fed charge choice as it fails to defend the opening vary for 2022, and a transfer under 30 within the RSI is prone to be accompanied by an additional decline in bullion like the worth motion seen in the course of the earlier 12 months.

Gold Price Daily Chart

Source: Trading View

• The value of gold trades to a contemporary yearly low ($1764) following the string of failed makes an attempt to push above the 50-Day SMA ($1840), and bullion might observe the adverse slope within the shifting common as the Relative Strength Index (RSI) flirts with oversold territory.
• A transfer under 30 within the RSI is prone to be accompanied by an additional decline within the value of gold like the worth motion seen in 2021, however want an in depth under the Fibonacci overlap round $1761 (78.6% growth) to $1771 (23.6% retracement) to convey the December low ($1753) on the radar.
• Failure to defend the October low ($1746) might push the worth of gold in the direction of the $1725 (38.2% retracement) area, with a break under the September low ($1722) opening up the $1690 (61.8% retracement) to $1695 (61.8% growth) space.
• However, failure to interrupt/shut under the overlap round $1761 (78.6% growth) to $1771 (23.6% retracement) might push the worth of gold again in the direction of $1816 (61.8% growth), with the subsequent space of curiosity coming in round $1825 (23.6% growth) to $1829 (38.2% retracement).

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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