Gold prices retreated from their recent peak

On Friday, gold prices continued to decline, extending their pullback from the new record high of $2222 reached on Thursday, following a strong rejection upon testing the psychological barrier of $2200.

The precious metal faced increased selling pressure as the dollar strengthened, particularly after the Federal Reserve opted to maintain its current policy stance and indicated that borrowing costs might remain high, given the robust condition of the US economy. This dampened expectations for rate cuts as early as June.

Nevertheless, the Federal Reserve still maintains a trajectory towards policy easing later this year, which is expected to provide long-term support for gold prices.

Currently, key support levels are identified at $2146/41, representing this week’s low and the former record high from December 4th. These levels are expected to serve as significant barriers, containing any further downside momentum and keeping the price action within a consolidated range. Further support is anticipated around the $2131 mark, which corresponds to the Fibonacci retracement level of 38.2% from the rally between $1984 and $2222, bolstered by the rising 20-day moving average. Any extended declines are anticipated to find solid support at this level, marking a healthy correction within the broader uptrend.

The technical outlook presents a mixed picture on the daily chart. While moving averages indicate a bullish setup, momentum and RSI indicators are trending downwards, having diverged from the price action in previous sessions. This suggests a need for caution among investors.

Res: 2186; 2200; 2222; 2250

Sup: 2160; 2146; 2141; 2131