- Fed decision and forecasts on Wednesday could be very significant
- Is the Fed ready to replicate the ECB’s explicitly dovish statement?
- Gold testing key resistance zone ahead of the meeting
Gold is trading a little flat on Tuesday, perhaps showing a little caution ahead of the Fed meeting after a decent recovery in recent days.
The yellow metal slipped back toward $1,900 amid resilient economic figures from the US that fed into fears of interest rates staying high for longer, as the central bank has repeatedly warned.
The question now for gold traders is whether the Fed is willing to acknowledge that it’s probably done with rate hikes, as we heard from the ECB last week, or continue to insist another is likely. The dot plot will be key to this but as always, traders will hang on Powell’s every word. A hawkish tone from the Fed could put $1,900 in jeopardy.
Gold testing notable resistance
While the focus has been on what’s happening below, there are key levels above that are also worth monitoring ahead of the Fed decision.
Source – OANDA on Trading View
Gold is already testing some of these but ultimately it’s the cluster of them that could be impactful. The yellow metal has a number of potential resistance points between $1,930 and $1,950 from key Fib levels to the 55/89-day simple moving average band and a declining trendline.
A break of $1,950 overcomes all of these which could be a very bold and bullish move ahead of the Fed or potentially a very dovish signal if it occurs after the central bank meeting tomorrow. A move above here and the focus may switch back to the July highs and, of course, $2,000, a major psychological barrier that it has only traded above on a few brief occasions in its history, most recently in May.
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