Gold prices continue to decline ahead of the Federal Reserve meeting and the release of non-farm payroll data
Gold prices faced renewed pressure on Tuesday, losing around 1.5% so far and breaking through the pivotal $2,300 level, which aligns with key technical support levels such as the psychological barrier, the daily Kijun-sen, and the April 23rd spike low.
Traders are now focusing on major events this week, including the Federal Reserve meeting concluding on Wednesday and the release of US non-farm payrolls on Friday.
The US central bank is expected to keep rates steady again, with speculation around the timing, size, and pace of future rate cuts being tempered due to recent stronger-than-expected US inflation data.
There is market speculation that the timing of the first US rate cut may shift to the fourth quarter of this year or even early 2025, which could make gold less attractive as a safe-haven asset and increase the risk of a deeper correction before a potential bullish reversal.
Despite this, the overall outlook for gold remains positive due to ongoing geopolitical instability and increased demand from central banks, supporting the yellow metal.
Gold recently hit a series of new record highs and is on track for a second consecutive strong monthly gain, but weakening indicators on the daily chart (such as negative 14-day momentum and an impending bear cross of the converging 10-day and 20-day moving averages) along with a long upper shadow on the monthly candlestick suggest that bullish momentum may be waning.
A sustained break below the $2,300 zone could lead to a deeper pullback, with the next significant support level at $2,260 (Fibonacci 38.2% retracement of the $1,984 to $2,431 rally), which would ideally contain a healthy correction ahead of a new push toward the $2,500 target.
Caution is advised if the $2,260 level is breached, as it could trigger a further decline toward the $2,200 area (50% retracement / 55-day moving average).
Res: 2326; 2340; 2352; 2388
Sup: 2291; 2260; 2222; 2200
