While the gold market got off to a positive start this year – albeit with some sharp swings – the latest sessions have seen the yellow metal lose some of its luster. Looking at the spot market, gold closed on the midweek session at an average price of $1,958.40, conspicuously below its 50-day moving average (standing at $2,001.49). Notably, the 200 DMA provides support at $1,843.50.
Understandably, gold incurs challenges from a familiar headwind: the Federal Reserve and its broadly hawkish monetary policy. With the central bank wrestling with an inflation rate that skyrocketed once social normalization trends picked up in late 2021 to early 2022, it attempted to curb consumer prices with higher benchmark interest rates. Unfortunately, the unique dynamics of the post-COVID-19 recovery effort sparked unusual trading patterns.
