News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • All eyes on the Fed on Wednesday as investors weigh on chances of a taper announcement. Get your weekly equities forecast from @HathornSabin here: https://t.co/Cv06XcvldF https://t.co/I12g2YPkdE
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/KsPiWBysiR
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/iUvhLfQgcK
  • The US Dollar caught a bid in the late part of last week to set a fresh September high. FOMC is around the corner, are bulls going to be able to push for another fresh high? Get your weekly US Dollar forecast from @JStanleyFX here: https://t.co/ZkDHyV1VhM https://t.co/w5sPChKdNx
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/bde30KM8OE
  • The Australian Dollar remains vulnerable to most of its major counterparts, with AUD/USD and AUD/JPY resuming losses. Did AUD/NZD bottom? AUD/CAD may consolidate. Get your weekly Australian Dollar forecast from @ddubrovskyFX here: https://t.co/sjh91mjtXs https://t.co/dGT067zKnH
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/VLZQhrQTAf
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/j5xDAG6LLb
  • While the meetings of central bankers in the US, Japan and the UK will be front, left and center of traders’ minds this coming week, it would be wise not to ignore next Sunday’s German Federal Election. Get your euro forecast from @MartinSEssex here: https://t.co/m920Uvmngm https://t.co/yQYtfHf66s
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/Dqq9S9vGvo
Gold Price Rebound Unravels Ahead of Fed’s Last Meeting for 2020

Gold Price Rebound Unravels Ahead of Fed’s Last Meeting for 2020

David Song, Strategist

Gold Price Talking Points

The V-shape recovery in the price of gold appears to have stalled ahead of the Federal Reserve’s last meeting for 2020 amid the failed attempt to test the 50-Day SMA ($1875), and it remains to be seen if the fresh forecasts from Fed officials will influence the precious metal as bullion appears to be moving to the beat of its own drum.

Advertisement

Gold Price Rebound Unravels Ahead of Fed’s Last Meeting for 2020

The rebound from the November low ($1765) unravels, with the price of gold slipping back below the former support zone around $1847 (100% expansion) to $1857 (61.8% expansion), which incorporates the August ($1863) and September low ($1849), and bullion may face headwinds throughout the remainder of the month as major central banks take additional take additional steps to foster a stronger recovery.

The European Central Bank’s (ECB) decision to expand the pandemic emergency purchase programme (PEPP) by EUR 500B to EUR 1.850 trillion may put pressure on the Federal Open Market Committee (FOMC) to provide additional monetary stimulus on December 16 amid the threat of a protracted recovery, and the Fed may take a similar approach as Chairman Jerome Powell and Co. “assess how our ongoing asset purchases can best support our maximum employment and price-stability objectives as well as market functioning and financial stability.

In turn, key market trends may persist throughout the remainder of the year as the Greenback continues to show an inverse relationship with investor confidence, and the tilt in retail sentiment looks poised to persist as the net-long US Dollar bias from earlier this year resurfaces.

Image of IG Client Sentiment

The IG Client Sentiment report shows traders are net-long USD/CHF, USD/CAD and USD/JPY, while the crowd is net-short GBP/USD, EUR/USD, AUD/USD and NZD/USD even though the US Dollar Index has plummeted more than 4% off the September highs.

Nevertheless, the price of gold may continue to move to the beat of its own drum as it no longer traders to fresh yearly highs during every single month in 2020, and the low interest rate environment along with the ballooning central bank balance sheets may no longer provide a backstop for gold as monetary authorities continue to combat the economic shock from COVID-19.

With that said, decline from the record high ($2075) looks to be a shift in market behavior rather than an exhaustion in the bullish trend as the rebound from the November low ($1765) appears to have stalled ahead of the 50-Day SMA ($1875), and the Relative Strength Index (RSI) indicates a similar dynamic as the oscillator continues to track the downward trend established earlier this year.

Gold Price Daily Chart

Image of gold price daily chart

Source: Trading View

  • The price of gold pushed to fresh yearly highs throughout the first half 2020, with the bullish price action also taking shape in August as the precious metal tagged a new record high ($2075).
  • However, the bullish behavior failed to materialize in September as the price of gold traded below the 50-Day SMA ($1875) for the first time since June, with developments in the Relative Strength Index (RSI) negating the wedge/triangle formation established in August as the oscillator slipped to its lowest level since March.
  • The correction from the record high ($2075) now indicates a potential shift in market behavior rather than an exhaustion in the bullish trend as the price of gold trades at its lowest level since July, with the RSI highlighting a similar dynamic as it dipped into oversold territory for the first time since 2018.
  • The V-shape recovery emerged following the failed attempt to test the July low ($1758), but the rebound from the November low ($1765) appears to have stalled ahead of the 50-Day SMA ($1875), with the price of gold slipping back below the former support zone around $1847 (100% expansion) to $1857 (61.8% expansion), which incorporates the August ($1863) and September low ($1849).
  • Lack of momentum to hold above the $1816 (61.8% expansion) to $1822 (50% expansion) area may open up $1786 (38.2% expansion), with the next region of interest coming in around $1754 (261.8% expansion) to $1764 (50% retracement).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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

DISCLOSURES