Analysis of Gold: All eyes on Fed
The gold markets has recently been quite resilient, with the bulls stepping in every time the bears are about to take over and it looks like gold has been a safety trade over the past weeks amid concerns about the global economy. At $1629 at the time of writing, the precious metal is trading just below the key resistance level at $1640. With the Fed scheduled to signal on Wednesday whether it will relent to or hold against calls for further stimulus, we could see some sharp movements in the price of gold, that could give to the market the fuel that it needs. With investors anticipating that the Fed would find some kind of way to ease further, most likely by extending Operation Twist, we could see the greenback giving up the hard-won ground, boosting gold further up. The technical picture favours the bulls, with the MACD signal line crossing above zero and the RSI hovering above 50 over the last several sessions on the daily chart. Should the Fed launch more measures to stimulate the US market, the precious metal could climb back to April highs at above $1650. In the alternative scenario, we could see a sharp drop in the price of gold that could drag the precious metal towards the 1.550 level, as investors have already been pricing in the event.
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