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Gold Prices May Hold Key Support as Fed Rate Decision Looms

Gold Prices May Hold Key Support as Fed Rate Decision Looms

Ilya Spivak, Head Strategist, APAC

Talking Points:

Gold prices fell as improving risk appetite on Wall Street – epitomized by a new record high on the benchmark S&P 500 index – drove capital flows out of the safety of Treasury bonds and drove yields higher. That understandably undermined the appeal of non-interest-bearing assets.

From here, the yellow metal may struggle to find near-term direction as all eyes turn to the Fed monetary policy announcement. The central bank is expected to unveil “quantitative tightening” (QT) to wind down its massive post-crisis balance sheet and update official interest rate hike path projections.

Crude oil prices marked time after rebounding to a four-month high, as expected. The monthly EIA Drilling Productivity report now enters the spotlight. Traders are likely keen to see the extent to which hurricane-related output disruptions affected the US output counterweight to OPEC-led production cuts.

Retail traders expect gold to go up. Find out here what that hints about the actual price trend!

GOLD TECHNICAL ANALYSISGold prices are probing below support at 1321.51 (23.6% Fibonacci retracement, trend line), with a daily close below that paving the way for a challenge of the 1295.46-99.25 area (38.2% level, double top). Alternatively, a turn back above the 14.6% Fib at 1335.24 targets the September 8 high at 1357.50.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices stalled after testing resistance marked by the August 1 high at 50.40. A break above this threshold on a daily closing basis exposes the May 25 top at 51.97. Alternatively, a reversal below trend line resistance-turned-support at 49.08 opens the door for a retest of the September 11 low at 46.98.

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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