- Summary:
- Gold price (XAU/USD) may be set for more downside action after the Fed says it is ending the SLR exemption for banks by the end of the month.
Gold price (XAU/USD) appears to have run out of any form of bullish momentum after the Fed announced Friday it was ending leverage exemptions for banks once the current terms expire by month-end.
The Federal Reserve had eased the Supplementary Leverage Ratio (SLR) requirements for banks, as a way to allow them some extra liquidity via the exclusion of deposits and bonds from their capital reserve requirements.
This hawkish announcement from the Fed has enabled the 10-year bond yield to rise from intraday lows around 1.679% to trade at 1.730% as of the time of writing. With the US Dollar starting to see some strength, the ability of gold prices to stay above the $1730 mark is now under threat.
Gold Price (XAU/USD) Levels to Watch
Gold price is struggling to cross above the 1741.01 resistance line. This level is starting to look like a river too deep to cross for bulls on the XAU/USD. A price drop below the ascending trendline on the 4-hour chart, which connects the lows of 8 March, 12 March and 18 March, remain the support to watch. A drop below this line could trigger a huge selloff, targeting 1719.13 initially (18 March low), followed by the 1699.43 support and the 1680.59 support.
On the other hand, bulls need to force prices not just above 1741, but also above the 18 March high to form a higher high that signals a short-term uptrend. This move would then open the door for the gold price to attempt a march towards 1763.30, with 1789.49 serving as a potential target to the north that presently looks far-fetched in the short term.
Gold Price (XAU/USD) 4-hour Chart
