Gold drops further near $1565 amid risk appetite
- XAU/USD extends retreat from two-week highs.
- DXY off highs consolidates gains above 98.00 ahead of FOMC statement.
Gold prices continued to move lower during the American session and reached a fresh daily low at $1566/oz. It retreated further after it climbed yesterday to $1588, the highest level since January 8.
Wall Street shines, gold falls
XAU/USD filled the weekly opening gap, falling below Friday’s close. The improvement in market sentiment, a stronger US dollar and higher US yields pushed gold further lower.
Data from the US released on Tuesday came in mixed. The Federal Open Market Committee started its two-day meeting. On Wednesday, the central bank will announce its decision and Chairman Powell will hold a press conference. No change in rates is expected. US President Trump criticised the Fed’s policy again.
Technical outlook
The retreat and failure of XAU/USD again above $1580 could point to more losses in the short-term, particularly if it holds under $1572, the 20 simple moving average in four hours chart. The next strong support area is seen near $1560 (uptrend line and key SMA in the 4-hour chart).
A recovery to $1573 would alleviate the bearish pressure from gold but as long as it fails to consolidate above $1580, gains will remain limited.