Gold: Pre FOMC Outlook- Is Dovish Fed Enough for Gold Bears?
June 16, 2021|The Forex Secret –The global financial market awaits what the Federal Reserve says about the US economy in today’s FOMC meeting. The US economy showed a mixed sentiment where some economic events show that the country is growing fast. However, the significant fundamental release is the quarter 1 GDP that showed a 6.3% growth in the economy.
On the other hand, the fear of inflation is hovering in the air, and investors are keen to see what the Fed says about the economy today. As per the current projection, any dovish tone with the possibility of inflation mainly brings the US dollar down against other currencies. Gold will be the biggest gainer due to its safe Haven nature.
However, the economic releases show strength to the economy, while in the post-Covid situation, the country is growing faster than other major economies. In this context, there is some reason to believe that faith will show a hawkishness and surprise the market. In that case, investors who have waited for the gold to hedge their position for the inflation risk might liquidate their trades that may create a sharp decline in gold.
Let’s see the possible key areas of gold that a trader should monitor before the FOMC:
Gold Bullish Possibility
Gold failed to sustain above the 1900.00 level that pushed the price below the dynamic level of 20 EMA on the daily chart. However, the price showed some bearish rejection is below the dynamic level, and became volatile. In this context, any strong rebound from the near-term support level 1844.90 may take the price higher.
The primary target of the bullish pressure will be the 1900.00 level and any bullish daily close above this level may take the price higher towards the $1951.22 resistance level.
Gold Bearish Possibility
In the same price chart, the 1844.90 is the major barrier for sellers where any strong bearish daily close below this level may take the price lower.
In this indicator window, the Aroon Down is above the Aroon Up and at 100 level, proving evidence that sellers are in control.
Overall, traders should wait for the daily close after the FOMC and take trading decisions based on the breakout and retest approach.