Gold bulls want to take over close to two week high before FOMC minutes.
The gold price (XAUUSD) strengthens throughout Tuesday’s Asian session, building on its overnight surge from the $1,966 1,965 region. The Federal Reserve (Fed) may start loosening monetary policy earlier than anticipated. According to recent statistics from the US that indicated a sluggish labor market and decreasing inflationary pressures. As it is Supported by a further drop in US Treasury bond rates. Which pushes the non-yielding yellow metal back toward a two-week high reached last Friday and drives the US Dollar (USD) to its lowest point since August 31.
On the other hand, the robust intraday increase appears to be untouched by the generally bullish risk tone. That tends to weaken the price of safe haven gold. Even though the USD is still moving in the precious metal’s favor.
Investors are now looking to the FOMC meeting minutes, which are critical, for future policy action and new momentum.
Investors’ confidence was bolstered by China’s pledge of more government stimulus measures. Which continues to sustain the positive market sentiment. But given the uncertainties, it is unclear if the XAUUSD will be able to take advantage of the momentum before the FOMC meeting minutes are released. Regarding the exact moment the Fed will begin lowering interest rates.
Gold Technical Outlook
The multi-month peak that the gold price touched in October in the $2.009 2,010 range may be retested.
From a technical standpoint, the price of gold should be able to recover the psychological $2,000 barrier. If there is some follow-through purchasing above the swing high from last week, which is located around $1,993. The momentum may continue to build in favor of retesting a multi-month high, maybe in the $2,009 2,010 range that was touched in October.
A persistent increase above the latter will be interpreted by bearish traders as a new catalyst and pave the way for a continuation of the recent, somewhat positive bounce from levels just below the 200 day Simple Moving Average (SMA).
Conversely, the $1,978 1,977 range appears to be safeguarding the immediate decline in front of the swing low for the night. Roughly around the $1,965 range. Should the aforementioned support levels not be held, the price of gold may be more susceptible to a rapid decline back towards the 200 day SMA, which is now trading in the $1,938 1,937 range. The 100 and 50 day SMA confluence. Which is located around the $1,930 1,929 region, comes next.
If this is broken forcefully, it will tip the scales in favor of bearish. Traders in the immediate term and cause some technical selling.
