The Fed news on interest rates has lowered gold prices. The brief rally in the yellow metal came to a halt and ended negative, almost touching the yearly low.
The Federal Reserve has decided to hold interest rates steady. The Federal Open Market Committee says that the labor market is showing good strength, and economic activity is expanding. Inflation is lower than the expected 2 percent and these have been positive news to the economy.
Spot gold was at $1,271.50 per ounce in New York. Silver was down at $14.72 per ounce.
Gold rates have seen a huge weekly decline. The decline corresponds to the U.S. dollar which saw a modest rally. Further, crude oil has seen a four-week low.
The daily gold chart looks a bit weak. If the NFP release is weak or in case of a risk-aversion, it may reverse, else gold prices will see a sell-off.
The 200-Day Moving Average is at $1,262 per ounce. It is also the 50 percent Fibonacci retracement level. If gold goes down below levels of $1,266.44 per ounce, which is also the lows of April 23, it may go down to touch this technical support at 200-DMA.
If it finds a bullish reversal, it may touch levels of $1,287 per ounce.
Further, the U.S. dollar is showing a bullish hammer pattern which points to a higher level. This will put pressure on gold prices which may send it to the April lows of $1,266. This is also the lows found in the months of August and in October and November in 2018.
However, analysts feel that the spot gold prices may reverse and move upwards, though traders have a long position in the gold market.
It is found that there is an inverse correlation between gold and Bitcoin. With gold down by 6 percent since February, Bitcoin may see an increase in the near future.