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Gold Flat Ahead of Fed
Gold prices are looking very muted ahead of the FOMC later today, reflecting some uncertainty in the market. While the Fed is widely expected to pause its 15-month tightening campaign today, expectations are a little more split over the likely forward guidance to be offered and the tone of the meeting.
Fed in Focus
The latest inflation data released yesterday makes a strong case for the Fed taking a more neutral view on further tightening, given that CPI is still falling sharply. However, recent Fed commentary, ahead of the pre-meeting blackout period, had been firmly built around the need to keep rates at higher levels for longer as well as potentially using further tightening.
Implications for Gold
If the Fed is seen delivering this message, USD might see some fresh buying which could weigh on gold prices near-term. However, if the Fed is seen scaling back its hawkishness and perhaps signalling a desire to keep rates on hold over coming months instead of signalling further tightening to come, this might well drive gold prices higher. Looking at the dot plot in particular, if the Fed is seen bringing down its rate projection, this would be especially bullish for gold prices.
Technical Views
Gold
For now, gold prices continue to hold below the 1973.51 level and the broken bull channel bottom. With momentum studies flattened, risks of a deeper correction remain while price holds below here, putting focus on 1871.04 as the next support level to watch. To the topside, back above 1973.51 and focus shifts back to 2069.41 as the next objective for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.