Gold price reverses before the Fed rate decision

Gold price news, and analysis

• What are the market anticipations from the FOMC meeting today ?
• The Gold price could rally further if it surpass this level

Investors are closely observing the developments expected from today’s Federal Open Market Committee (FOMC) meeting which is widely anticipated to result in maintaining the US interest rates, unchanged at the current level of 5.5%. During the press conference led by the Fed Chairman, market participants are seeking a clearer understanding of the potential for interest rate hikes in the upcoming December meeting. Any indications in this direction would likely strengthen the US dollar while negatively affecting gold prices. That said, it is expected that Mr. Powell would continue to emphasize that the interest rate decision hinges on economic data, particularly the November Non-Farm Payrolls (NFP) and Consumer Price Index (CPI).

In addition, the markets are eagerly awaiting the US Treasury’s plan for issuing Treasury bonds. This plan is expected to involve an increase in the number of auctions for both long-term and short-term Treasury bonds. Nevertheless, there might be a reduction in the quantity of bonds offered, mainly in response to the recent uptick in bond yields, which have recently reached 5%. It’s worth noting that increasing the supply of bonds typically exerts a negative influence on bond prices and a positive influence on bond yields.

Gold Price Daily Chart

Chart source ADSS Platform

On October 27, the price of gold surged to a multi-month high at $2009 per ounce. However, profit-taking activities led to a retracement in the price during this week. Currently, the price is fluctuating within the trading zone between 1974 – 2008. A daily close below the low end of this zone indicates a weakened upward momentum, potentially driving the price lower towards 1949, although the support level at 1960 should also be considered.

On the other hand, any failure in closing below the low end of the zone highlights that the upward trend is still intact, hinting at a possible rally towards the high end of the zone. A further daily close above the high end of the zone reflects a robust bullish momentum and may encourage traders to rally the price towards 2048. Nonetheless, the resistance area residing between 2018-2021 should be watched closely.