Gold prices have been trending lower in the short-term, approaching oversold territory. The bears in the market have been in control recently, pushing the price below key support levels like the resistance-turned-support trendline. The RSI and stochastic oscillator are showing signs of stabilization near previous lows, indicating that excessive bearish action may lead to a potential upward correction or some stability. However, the falling shorter-term EMAs suggest that the negative trend is likely to continue dominating the market in the near future.
If the bears manage to breach the floor at 2,280, the next support levels to watch out for are within the 2,250-2,260 area. This range includes the 23.6% Fibonacci retracement of the February-April uptrend, the lower boundary of the ongoing short-term bearish channel, and the protective trendline from March 5. A further drop could intensify selling pressures, potentially leading to a test of the 50% Fibonacci level at 2,200. The 2,185 zone from March could then become a critical pivot point for price action.
On the other hand, if there is a bounce off the 200-period EMA, we could see some congestion between the 20- and 50-period EMAs at 2,311 and 2,325 respectively. To shift the outlook to a more bullish stance, gold prices would need to break above the downward-sloping channel at 2,355. This level is crucial for a direct move towards the 2,400 mark. Further momentum could push prices above the record high of 2,430, although resistance may be encountered near the 2,460 level.
Traders should also keep an eye on the upcoming FOMC policy announcement scheduled for today at 18:00 GMT. Any hints from the Federal Reserve regarding interest rates and monetary policy could significantly impact gold prices in the short-term. Increased volatility and sudden price movements are expected around the time of the announcement, making it crucial for traders to exercise caution and closely monitor the market developments.
The current outlook for gold prices suggests a bearish bias in the short-term, with key support and resistance levels to watch out for. Technical indicators are signaling a potential reversal, but the overall trend remains negative. Traders should consider the upcoming FOMC announcement as a critical market catalyst that could shape the direction of gold prices in the immediate future.