Gold is consolidating between key support at $1,935 and resistance at $1,971 ahead of the highly anticipated Fed interest rate decision today. The technical structure indicates two likely outcomes:
Scenario 1 (Bullish):
If the Fed delivers a dovish hike of 25bps or pauses on rate increases, it would likely ignite a breakout above $1,971, opening the door for a rally to $1,983, $1,991, and $2,000 in the near-term. The bullish 50-day and 200-day moving averages align with this view. A dovish Fed could spark significant USD weakness, fueling safe-haven flows into gold.
Scenario 2 (Bearish):
An aggressive 50bps hike by the Fed would likely spark a bearish breakdown below the $1,935 support. This may trigger a decline to $1,927, $1,953, and $1,949. Below here, the $1,945, $1,941, and $1,935 zones could be tested, with the 200-day MA offering a backstop. Hawkish Fed policy often weighs on gold as yields rise.
The neutral RSI warrants caution over the short-term. However, gold will likely breakout with strong momentum following the Fed announcement, providing a lucrative trading opportunity. A close below $1,935 or above $1,971 is needed to confirm the post-Fed directional bias. The levels of $1,949 and $1,967 are key to watch today.
Be cautious that depending on the Feds Interest Rate decision the market can also reverse for the above thought processes.
Key levels to watch are: 1962.40,1967,1971.80,1977,1983,1991,1953,1947,1943,1938,1987,1991,1997,2003,2008