Gold recently rejected off the $1,350 area with a strong bullish move inside the overall bearish bias while forming a Bearish Divergence. This week, the FOMC is holding a policy meeting. A policy update is due to be unveiled on Wednesday, so market participants will look for clues about upcoming rate cuts. In this context, certain weakness on the USD side may lead to further gains in gold prices.
The FOMC meeting this week is expected to be the biggest event for the gold market. No rate cuts are expected on Wednesday’s meeting, but markets have steadily been increasing bets for cuts throughout 2019 amid concerns over the negative impact of the US – China trade tensions, signs of weak employment, and muted inflation of consumer prices. These signs are likely to assure the US Fed to revise its rhetoric in favor of a dovish bias. Moreover, gold benefits from lower interest rates that lower the opportunity cost of holding the non-yielding bullion.
From the technical viewpoint, the price has seen strong rejection off the $1,350 area while trading far from the dynamic level of 20 EMA. The price is expected to pull back towards $1,300-20 support area before proceeding higher with a target towards $1,400 and later towards $1,500. The Bearish divergence increased the probability of a deeper decline, though it will hardly sustain as a strong counter-move. Thus, gold is going to make a retracement along the way. The bullish bias is expected to continue further as the price remains above $1,300 area with a daily close.
SUPPORT: 1,290, 1,300, 1,320
RESISTANCE: 1,350, 1,380, 1,400
The material has been provided by InstaForex Company – www.instaforex.com