Charts of the Week - XAU/USD – Volatile days for Gold.

XAU/USD – Volatile days for Gold.

• Resistance Zone: $1920 to $1940
• Key Resistance: $1895
• Major Pivot Point: $1870
• Key Support Level: $1820
• Support Zone: $1790 to 1770
• 200 Day SMA – Green Line
• 50 Day SMA – Red Line
• CBOE VIX – Volatility Index @ 23.96 -0.06 (-0.25%)

Trade Insights – XAU/USD

The chart shows Viable long positions above the Pivot at $1870 with the first target of Key Resistance Level @ $1895 and after consolidation towards the Resistance Zone at $1920 to $1940.

Alternatively, Short positions below the Pivot at $1870 if the pair drops out of the ascending parallel channel with the target of the Key support level at $1820. And then it heads towards the Support Zone between $1790 to $1770.

XAU/USD Chart Analysis:  Directional bias - 2 Weeks 

XAU/USD chart shows that the gold prices have gone through a very volatile past few days. On Friday Gold saw a big reversal from $1825 touching $1875 at one point on the day. Then on Monday 13^th June Gold dropped from the peak of $1875 to close under $1820. Currently, it appears that Gold could break below the Key Support Level at $1790 ahead of the FOMC Interest rate decision today. A close below the $1810 level would mean that Support levels could become invalid and increased volatility could move the prices towards the $1750 Mark.  

The pair has now dropped below 50 Day SMA and 200 Day SMA lines and risks falling further. The Stochastic Oscillator has already signaled a Divergence after which the prices have fully dropped, and the oscillator currently already below -50 points is still heading downwards and could see a -80 reading on the indicator.    

Fundamental Overview: 

The CPI data released on Friday showed that Inflation has gone up to touch 8.6% in May as compared to 8.5% in March which we all were expecting to be the peak of the Inflation. This has pushed the markets to believe that today Feds could hike the rates by 0.75% in a first major hike since November 1994. However, Markets tend to always take extreme views of the situation and tilt in the direction of the view. We are expecting that the Feds would continue to take a gradual approach rather than hurrying into rate hikes to control the inflation.

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