Gold has recovered cautiously over the last few weeks as it seems increasingly likely that the Fed has reached its peak rate of this cycle and demand for havens in China has strongly increased as the yuan continued to decline. Conversely, the overall fundamental situation for the yellow metal remains negative, with the funds rate almost guaranteed to remain higher than headline inflation until the second quarter of next year. According to the latest Commitment of Traders, the net positions of commercial traders are dropping and large speculators increasing.
On the chart, it seems that $1,900 is confirmed at a resistance, with the price having bounced from there last Thursday. The close bunching of all of the moving averages here – 20, 50 from Bands, 100 and 200 – might challenge further gains since each could function as a resistance. However, the slow stochastic at around 32 is closer to oversold than neutral while ATR at around $11.90 has reached a fresh post-covid low.
That’s a normal situation in the runup to a meeting of the Fed. Large participants in markets generally avoid entering before significant events which might lead to clear shifts in narrative or sentiment. Traders should be prepared for a strong reaction to the Fed’s meeting on Wednesday. The most favourable situation at the moment would be consolidation with possible further gains, but if Dr Powell’s comments are perceived to be hawkish it’s likely that the price of gold will go down at least in the immediate aftermath of the press conference.
On the chart, it seems that $1,900 is confirmed at a resistance, with the price having bounced from there last Thursday. The close bunching of all of the moving averages here – 20, 50 from Bands, 100 and 200 – might challenge further gains since each could function as a resistance. However, the slow stochastic at around 32 is closer to oversold than neutral while ATR at around $11.90 has reached a fresh post-covid low.
That’s a normal situation in the runup to a meeting of the Fed. Large participants in markets generally avoid entering before significant events which might lead to clear shifts in narrative or sentiment. Traders should be prepared for a strong reaction to the Fed’s meeting on Wednesday. The most favourable situation at the moment would be consolidation with possible further gains, but if Dr Powell’s comments are perceived to be hawkish it’s likely that the price of gold will go down at least in the immediate aftermath of the press conference.