Gold Prices Slide as Investors Await Fed Rate Decision

Key Takeaways

• June Comex gold futures and XAU/USD are down as investors focus on the Fed’s interest rate decision. GLD ETF settled slightly higher on Monday.
• Gold hit a high of $2,031.70 an ounce on Monday, before dropping back to $1,983.70.
• Gold gained over $100 after the collapse of Silicon Valley Bank earlier this month.
• The market is cautious ahead of the Fed rate decision, with traders now largely expecting a 25-basis-point rate hike.

Overview

Gold prices dropped for the second consecutive day on Tuesday, as investors shifted their attention to the U.S. Federal Reserve’s interest rate decision.

At 11:16 GMT, June Comex gold futures are trading $1988.80, down $10.90 or -0.55%. The XAU/USD is at $1967.87, down $8.835 or -0.45%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $183.81, up $0.04 or +0.02%.

The precious metal had reached $2,031.70 an ounce on Monday, its highest since April 2022, before dropping back to $1,983.70.

Gold Up Over $100 Following SVB Collapse; Caution Ahead of Fed Rate Decision

Gold has gained over $100 following the collapse of U.S.-based Silicon Valley Bank earlier this month, as investors flocked to the safe-haven asset.

The market remains cautious ahead of the Wednesday’s Fed rate decision. Traders now largely expect a 25-basis-point rate hike after the Fed’s two-day meeting concludes on Wednesday, a dramatic turnaround from expectations of a 50 bps increase before the banking crisis triggered by the collapse of Silicon Valley Bank and Signature Bank earlier this month.

Daily June Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. A trade through $2031.70 will signal a resumption of the uptrend. A move through $1830.20 will change the main trend to down.

The minor trend is also up. A trade through $1906.00 will change the minor trend to down. This will shift the momentum.

The minor range is $1906.00 to $2031.70. Its 50% level at $1968.90 is the first downside target.

The main range is $1830.20 to $2031.70. Its retracement zone at $1931.00 to $1907.20 is the major downside target.

Daily June Comex Gold Technical Forecast

Trader reaction to $2007.70 is likely to determine the direction of the June Comex gold futures contract on Tuesday.

Bearish Scenario

A sustained move under $2007.70 will indicate the presence of sellers. If this creates enough downside momentum then look for a test of $1968.90.

Watch for a technical bounce on the first test of $1968.90, but if it fails then look for the selling to possibly extend into $1931.00 to $1907.20.

Bullish Scenario

A sustained move over $2007.70 will signal the return of buyers. This could lead to a retest of $2031.70. Taking out this level could trigger a surge into the April 18 main top at $2045.80.