Gold prices continued their third consecutive corrective decline early Wednesday. Therefore, it failed to climb above the $2,000 level once again. A typical caution prevails in financial markets ahead of the Federal Reserve decision. This situation maintains the buoyant atmosphere around the safe-haven US Dollar.
The focus of the markets will be the Fed interest rate decision and Powell’s speech!
The dollar is consolidating overnight gains, shouldering the move in US Treasury yields, amid a negative shift in risk sentiment. Meanwhile, the China Caixin Manufacturing PMI index unexpectedly contracted in October. This, combined with the uneasiness experienced in the markets before the important US employment data and the Fed interest rate decision, reduced the risk appetite. Investors are also weighing dire global forecasts from the World Bank amid the ongoing war between Israel and Hamas and its impact on oil prices. In light of these factors, the dollar remains the preferred safe-haven asset. On the other hand, this is why gold prices hit multi-day lows around $1,980.
However, the main event risk remains the Fed’s interest rate decision. cryptokoin.com As we reported, the Fed will announce its interest rate decision today at 21:00 GMT. One pause is fully cooked. Therefore, Fed Chairman Jerome Powell’s words on the future interest rate path and the economic and inflation outlook will be key to a new rise in the US Dollar. Markets expect the Fed to leave the door open for another rate hike due to the resilient US economy, tight labor market conditions and high inflation levels.
gold pricelari technical analysis: The doors are open for ascension!
Market analyst Dhwani Mehta analyzes the technical outlook for gold. The short-term technical outlook for the gold price continues to favor buyers. A ‘dip buying’ strategy will be implemented before the Fed decision. The 14-day Relative Strength Index (RSI) indicator has pulled back from the overbought zone, reopening the doors for further upside. Further supporting the bullish view, the 21-day Simple Moving Average (SMA) and the 50-day SMA ‘Bullish Cross’ remain in play. Meanwhile, the 21-day SMA has also crossed the 100-day SMA to the upside.
Therefore, additional declines are likely to find strong static support at $1.963. Below this, a test of the psychological $1,950 level cannot be ruled out. On the other hand, if gold buyers struggle to regain control, immediate resistance is foreseen at the $1,990 round level, where the $2,000 threshold will be retested. An acceptance above recent multi-month highs of $2,009 would revive the uptrend towards $2,020 in mid-May.
Gold market technical analysis: Bulls are in a strong position
Gold initially fell during Tuesday’s trading session, but bounced back and showed signs of support again. Technical analyst Christopher Lewis comments on what he sees in the technical picture of gold.
Plenty of upward pressure makes sense!
Gold prices initially fell during Wednesday’s trading session. However, it later returned as it appeared there were many buyers wanting to get involved in the markets. All else being equal, this is a situation where we continue to see buyers return to the situation. Because there are a lot of geopolitical concerns that keep people jumping into the gold markets. It also turned out that central banks around the world were buying much more gold than initially thought. So it makes sense that we’re seeing plenty of upward pressure.
If we break below the bottom of the candlestick during Wednesday’s trading session, then we could be down. But keep in mind that the market will continue to see a lot of volatility due to the fact that the Fed will be holding a meeting during the day. So this will cause at least some volatility. After all, interest rate markets will probably go crazy. So you need to be very careful about the idea of being overly aggressive.
People will continue to benefit from “cheap gold”
The market is trying to form a rising wedge of sorts. But at this point, we’re likely to continue to see a buy line in gold even as we move lower and lower. Meanwhile, the 50-Day EMA is sitting just below the $1,950 level. I also think this comes into the picture for some form of support in the gold price. On the other hand, if we can reverse a breakout above the top of the candlestick in Tuesday’s session, then the gold market is likely to eventually look towards the $2,050 level above, which has offered significant resistance in the past.
Regardless, I have no interest in shorting gold prices. Because frankly, there are too many geopolitical concerns to ensure that people continue to benefit from “cheap gold.” After all, it is considered a safe asset. Plus, it’s hard to imagine it dropping by any significant amount anytime soon.
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