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Gold Price Analysis: Fed Meeting Crucial for Breakout

Gold Price Analysis: Fed Meeting Crucial for Breakout

Justin McQueen, Strategist

Gold Price Analysis and Talking Points:

  • Bulls Eye Fed Meeting
  • Speculative Positioning Suggests Bullish Outlook

See our quarterly gold forecast to learn what will drive prices through mid-year!

Bulls Eye Fed Meeting

The topside breakout in gold had been somewhat short-lived after failing to consolidate at its best levels since July. Focus this week will be on the Fed meeting, whereby a less hawkish stance could provide a catalyst to propel gold prices higher towards resistance at $1262. While it is expected that the Fed will deliver a 4th rate hike, questions have been raised on how many more hikes the Fed will deliver in 2019. Particularly given the increased stock market fluctuations and deteriorating fundamental backdrop. As it stands, the dot plot projection suggests 3 rate hikes in 2019, however, FFR futures pricing imply as much as 40bps of tightening from now until the end of 2019.

Speculative Positioning Suggests Bullish Outlook

Speculative positioning via the CFTC continues to suggest that the outlook for gold is bullish, albeit in the medium/long term. While an unwind in short gold positioning has kept the precious metal firm, the fact that long positions have not increased, suggests that a lasting breakout on the topside may not be on the table in the short term.

What You Need to Know About the Gold Market

GOLD PRICE CHART: Daily Time-Frame (Feb-Dec 2018)

Chart by IG

Resistance 1: 1253 (200DMA)

Resistance 2: 1262 (50% Fib Level)

Support 1: 1238 (38.2% Fib level)

Support 2: 1208 (23.6% Fib level)

GOLD TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

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