Baxia Markets
May 23, 2024

XAUUSD Breakout Turns Bearish After Fed Meeting Minutes

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XAUUSD has experienced a sharp bearish breakout following the release of the Federal Reserve (Fed) meeting minutes, which revealed that policymakers were hesitant to lower interest rates and even considered raising them due to ongoing inflationary pressures. This expectation of prolonged higher interest rates has negatively impacted Gold, as higher interest rates increase the opportunity cost of holding non-yielding assets like Gold, making it less attractive to investors.

The price of XAUUSD has decisively broken below the descending wedge chart pattern, the EMA 200, and the Ichimoku cloud on the 1-hour time frame. These technical signals indicate a very bearish market. The bearish sentiment is further confirmed by the formation of a death cross on the EMA, where the EMA 50 crosses below the EMA 200.
Key resistance levels to watch include the EMA 200 and the Kijun-sen line. On the downside, the key support level is at $2355, the recent swing low. A break below this level could lead to a further decline towards $2336.

Both the MACD and RSI oscillator indicators are signaling strong bearish momentum. The market has broken below the oversold zone on the RSI and has remained there for 16 consecutive trading hours, indicating aggressive bearish activity. Meanwhile, the MACD shows a bearish pullback as the histogram is above the signal line, but both are below the zero line. If the histogram crosses below the signal line, it would confirm a continuation of the bearish trend.

Overall, XAUUSD's outlook remains bearish in the wake of the Fed's meeting minutes, with technical indicators and support/resistance levels suggesting further potential downside. Investors should monitor these levels closely as the market reacts to ongoing economic data and policy expectations.

Key Takeaways

  1. XAUUSD experiences significant bearish breakout post-Fed meeting minutes.
  2. Fed's reluctance to lower rates and discussion of rate hikes spurs Gold sell-off.
  3. Technical indicators signal bearish sentiment, with price breaking key support levels.
  4. Resistance levels at EMA 200 and Kijun-sen, while $2355 marks crucial support.
  5. Both MACD and RSI show strong bearish momentum, indicating aggressive selling pressure.

Key Economic Releases to Watch Today

NZD, Core Retail Sales

Actual 0.4% vs Forecast 0.0% vs Previous -1.6%

NZD, Retail Sales (QoQ)

Actual 0.5% vs Forecast -0.3% vs Previous -1.9%

GBP, S&P Global/CIPS UK Composite PMI

Forecast 54.0 vs Previous 54.1

GBP, S&P Global/CIPS UK Manufacturing PMI

Forecast 49.5 vs Previous 49.1

GBP, S&P Global/CIPS UK Services PMI

Forecast 54.7 vs Previous 55.0

USD,  Initial Jobless Claims

Forecast 220K vs Previous 222K

USD, S&P Global US Manufacturing PMI

Forecast 50 vs Previous 50

USD, S&P Global Services PMI

Forecast 51.2 vs Previous 51.3

USD, New Home Sales (Apr)

Forecast 677K vs Previous 693K

CAD, New Housing Price Index (MoM) 

Forecast 0.1% vs Previous 0.0%




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