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Gold Price Latest - Clinging on toTrend Support as FOMC Looms Into View

Gold Price Latest - Clinging on toTrend Support as FOMC Looms Into View

Nick Cawley, Strategist

Gold (XAU/USD) Analysis, Price and Charts

  • Gold continues to use trend support to push higher.
  • FOMC meeting may see the US dollar slide lower.
  • IG client sentiment mixed.

The price of gold is moving higher ahead of the latest Fed monetary policy decision and commentary later in the day and is supported by a cluster of positive technical signals. Fed chair Jerome Powell’s comments post-decision will be key, especially after last month’s Jackson Hole Symposium where Powell made a noted shift in monetary policy by signalling that inflation would be allowed to run higher than the central bank’s 2% mandate to allow the economy to rebound further. US interest rates will likely be kept at current ultra-low levels for years to come, keeping downward pressure on the US dollar and boosting the value of gold.

US Dollar Drifting Lower, What to Watch Out for at the FOMC Meeting

The daily chart shows spot gold trading back above both the 20- and 50-day moving averages and clinging onto the strong uptrend line off the mid-March $1,451/oz. low. The open above the 50-dma, the first time since mid-June, gives the recent move higher additional credibility and leaves the one-month high at $1,993/oz. made on September 1 the next upside target if the move continues. The trend support line, the 20- and 50-dma, and a series of recent lows down to $1.936/oz. may prove difficult for sellers to overcome in the short-term. All eyes on the Fed decision later today to see if the current move higher continues or breaks.

Gold Daily Price Chart (January – September 16, 2020)

Gold Price Latest - Clinging on toTrend Support as FOMC Looms Into View

IG client sentiment data shows 80.30% of traders are net-long with the ratio of traders long to short at 4.08 to 1.The number of traders net-long is 7.35% higher than yesterday and 1.04% lower from last week, while the number of traders net-short is 18.26% lower than yesterday and 8.42% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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