Gold price, XAU/USD, is now trading at the proximity of a bearish 20 Simple Moving Average (SMA). This indicates increasing signs of weakness in the market. Traders are concerned as the 20 SMA indicates poor momentum. XAU/USD is still trading well short of the more bullish looking 100 and 200 SMAs, making this particularly worrisome. The American dollar’s insatiable demand has pushed the gold price to a modest $3,320. Gold is in the process of testing key Fibonacci retracement supports in the zone.
In the past few trading sessions, XAU/USD had been under selling pressure for two consecutive days. This fight became particularly heated around the June price drop’s 61.8% retracement level, located at $3,374.56. This bearish trend has pushed the pair under the mildly bearish 100 SMA. Currently, it is in a precarious spot only slightly above both the 20 and 200 SMAs. The convergence of the 20 SMA with a horizontal 200 SMA provides further evidence that we may be witnessing a change in market sentiment.
Gold price, XAU/USD, is making new weekly lows. Analysts highlight that it retraced down to the 38.2% Fibonacci retracement level calculated on June’s price action, from $3,452.51 to $3,247.83. Current support levels are $3,311.70, $3,295.50 and $3,282.60 and current resistance levels are $3,350.18, $3,374.56 and $3,390.10.
The XAU/USD Momentum indicator has just crossed below its midline, indicating a loss of bullish momentum. The Relative Strength Index (RSI) is now just above 43. All of this leads to an increasing probability of the gold market becoming oversold.
Putting aside the effects of market forces, there is another wind—no, hurricane—washing over gold prices from afar. United States President Donald Trump has been relentlessly public, and thus, effective, on this point. He stated, “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!”
He further emphasized his stance by asserting that “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” Even something as straightforward as a press release can greatly mold market perceptions. Gold prices could start trending one way or another based on traders’ reactions to possible changes to U.S. fiscal policy.