Gold prices are heading towards the $1500 handle this morning after finding the right traction during yesterday’s session in the wake of the Fed’s decision to cut interest rates. While the FOMC made the decision to reduce rates, they are now likely on hold until economic data justifies additional stimulus. Ahead of the decision, the US Commerce Department reported a stronger than expected Q3 GDP, which grew by 1.9% year over year. The move weighed on the Dollar which paved the way for higher gold prices. The Fed’s policy statement released yesterday showed that the Fed will now use a higher bar for rate reductions. The committee voted 8-2 to lower the benchmark rate. The two dissenters preferred to hold rates steady. Fed officials have now cut rates three times since July to cushion the economy against a slowdown in business investment.
Gold prices rebounded from yesterday’s lows after bulls found the right support by the upper band presented on the chart to edge the $1500 handle. The price is currently trading above the $1494.87 support level with a bullish momentum as the overbought conditions are still far away. We will be focusing on the break above the $1500 level with the $1506.02 resistance level on our watch.
Support: 1494.87/ 1486.98
Resistance: 1506.02/ 1515.75