Gold Edges Higher after Repeated Downside Rejection; FOMC in Focus

Technical analysis of Forex market

Spot Gold moved higher on Tuesday and probes above $1200 barrier, after the action in two previous days failed to clearly break below base of thick daily cloud ($1195).

The yellow metal price holds within daily cloud for the third straight day, with growing upside prospect after double downside rejection and Monday’s long-legged Doji candle signaling indecision and possible reversal.

Bigger picture shows gold price entrenched within $1187/$1214 range, for the fifth consecutive week, with break out of the range needed to generate stronger direction signal.
Range’s upper boundary is reinforced by Fibo 38.2% of $1309/$1160 bear-leg and sustained break here would signal continuation of recovery from $1160 (16 Aug spike low).

– advertisement –

On the other side, initial bearish signal could be expected on break below daily cloud, but extension below range floor would confirm bearish outlook and signal an end of corrective phase from $1160.

Interest rate change-sensitive gold looks for Fed’s rate decision tomorrow, to get clearer direction signal. Fed is widely expected to increase rates, with expectations for another rate hike by the end of the year and hawkish tone of the central bank, expected to boost the greenback and make gold less attractive.

Another important factor is persisting trade conflict between the US and China, which could also affect yellow metal’s price on escalation.

Res: 1204; 1208; 1214; 1217
Sup: 1195; 1191; 1187; 1183