After US CPI figures fell short of expectations, gold started a rally and hit above $1,800. However, the Fed’s hawks, who stated that inflation is still high, did not change their stance. After that, the yellow metal slid down again. Credit Suisse says a break below $1,691/77 would be enough to complete a major ‘double top’. Also, TD Securities strategists note that the downtrend of gold continues to gain momentum.
The route of gold drawn by Credit Suisse goes to the bottom
cryptocoin.comAs you follow, gold remains in a range for now. However, a major ‘double top’ continues to threaten, as strategists at Credit Suisse point out. Strategists are waiting for sustained break above 55 DMA to confirm further range. In this context, strategists make the following assessment:
A convincing break above the 55-day average, currently seen at $1,786, would confirm further changes in the two-year range. The next resistance will be seen at an even more important 200-day average currently at $1,842. We continue to emphasize that a close break below $1,691/77 will be enough to complete a major “double top” that will at least reduce the risks in the next one-three months. We note that if this top is triggered, the next support will be seen at $1,618/16, then $1,560.
“Gold investors should not trust the Fed pivot!”
According to TD Securities strategists, the trend signals underneath have gotten worse. Strategists say that the downtrend of gold is still gaining momentum. Below that, they see gold not trusting the Fed pivot. Strategists make the following statement:
Trend signals in the yellow metal point to a strengthening downtrend that clashes with market hopes of a Fed pivot amid falling inflation. As long as gold remains below $1,890 before the end of the year, participants should not count on a regime change in gold prices linked to a pivot in Fed policy.
Traders and investors focus on FOMC minutes
Gold got off to a brisk start to August. However, it is now in standby mode. Traders and investors’ attention is now on the minutes of the Fed’s last monetary policy meeting. That’s why traders routinely turned to making profits and gold has lost value today.
With inflation spiraling out of control, expectations are now rising that the Fed may have to raise interest rates aggressively next month. Traders will scrutinize every word of the minutes for clues as to the extent of the Fed’s next rate hike. This will likely open the door to new volatility.
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