Gold Backs Away From Yearly Highs With Fed In The Spotlight For OANDA:XAUUSD By Alex_Boltyan_FXAnalyst – UK Prime News

Gold prices continued to pull back on Tuesday as market sentiment improved as investors brace for the Federal Reserve decision on Wednesday.

At the time of writing, the spot price, XAU/USD , is trading at $1,940 an ounce, nearly 2% below its opening price, having lost around $70 or 3.5% from its one-year high of $2,009 scored on Monday.

The retreat in gold prices has been mainly driven by soaring U.S. Treasury yields amid some relief among investors regarding the banking crisis. The 10-year note yield has risen 10 bps to 3.583% after striking multi-month lows the previous day.

The Federal Reserve two-day meeting concludes on Wednesday. After the recent developments in the banking sector, investors now speculate the FOMC will take a more cautious approach when it comes to rising rates. The CME FedWatch Tool shows an 80% probability of a 25 bps hike and 20% of a no-hike decision, while a 50 bps increase looks out of the picture, but Powell and fellow policymakers could still catch markets by surprise.

From a technical perspective, the XAU/USD holds a positive bias as indicators hold into positive ground on the daily chart despite the last sessions’ price pullback.

Immediate support is seen at the $1,895 area, former support and 61.8% retracement of the $2,070-$1,615 decline, followed by the 20-day SMA at $1,870. Loss of the latter could deteriorate the technical setup. On the flip side, the short-term key resistance area is $1,990-$2,010. A break above this level would expose 2022 highs at the $2,070 zone.