Gold Prices Rise as Markets Brace for Fed Rate Decision
- Gold prices eke out slight gain after dipping to 9-month low
- Crude oil prices appear to secure bullish break from range
- FOMC pre-positioning, API inventory data in focus ahead
Gold prices erased an intraday dip to nine-month lows to post a small gain at the start of the trading week. The recovery played out as the US Dollar dipped downward alongside Treasury bond yields and the priced-in 2017 rate hike path implied in Fed Funds futures moderated.
A discrete catalyst was not readily apparent, suggesting the move reflected pre-positioning ahead of Wednesday’s FOMC rate decision. Traders may be looking to reduce exposure amid concerns that the ever-cautious policy-setting committee will not match the sharp hawkish shift in the markets’ own outlook.
Crude oil prices retraced most intraday gains scored after OPEC secured the participation of a number of leading external producers for its output cut scheme. Still, the WTI benchmark managed to establish a foothold beyond the range containing prices since early June.
Looking ahead, portfolio realignment ahead of the Fed announcement may continue to boost gold prices. Follow-through may be limited however as traders wait for the passing of event before committing to a firm directional bias. Meanwhile, oil prices may turn their attention to the weekly API inventories estimate.
See the schedule of upcoming webinars and join us LIVE to follow the financial markets!
GOLD TECHNICAL ANALYSIS – Gold prices posted a modest bounce after touching a nine-month low to start the trading week. From here, a daily close back above the 14% Fibonacci expansion at 1162.04 opens the door for a retest of support-turned-resistance at 1180.17. Alternatively, a push below the 23.6% level at 1146.15 exposes the 38.2% Fib at 1120.36.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices retreated from 17-month highs but managed to secure a break of double to resistance in the 51.64-52.00 area on a daily closing basis. From here, a push above the 38.2% Fibonacci expansion at 53.49 sees the next upside barrier at 54.70, the 50% level. Alternatively, a move back below 51.64 exposes the December 8 low at 49.60.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To receive Ilya's analysis directly via email, please SIGN UP HERE
Contact and follow Ilya on Twitter: @IlyaSpivak
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.