GOLD Corrects After All-Time High, USD Index Faces Headwinds

Following a fresh all-time high at $2,079.76, gold prices have undergone a sharp correction to nearly $2,035.00, triggered by profit-booking after the Federal Reserve's altered language on interest rate guidance. As the precious metal experienced solid gains, the Fed hiked critical rates consecutively by 25 basis points to 5.00-5.25%. The next support level for a pullback is at the 50% Fibonacci level around the $2020.00 price level and the 61.8% level below $2010.00. These levels may be reached in case of a deep retracement, and as per our long-term forecast, the previous symmetrical triangle broken in the last two days should retest this area, resulting in a strong rejection area.

The USD Index is attempting to defend its immediate support level of 101.07, although the downside is currently preferred due to various headwinds such as renewed US banking crisis and debt ceiling issues. US President Joe Biden has no interest in raising the debt ceiling at the expense of his spending initiatives. Additionally, US banking jitters have resurfaced with Bloomberg reporting that PacWest Bancorp is considering strategic options, including a potential sale.

Trade closed: target reached:

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