Gold Price Could Extend Correction, FOMC Next09 January, 2019 by Aayush Jindal in Market Analysis
- Gold price formed a short term top near $1,298 and later declined against the US Dollar.
- There was a break below a major bullish trend line with support at $1,288 on the 4-hours chart of XAU/USD.
- The Euro Area Business Climate Index in Dec 2018 declined from the last revised reading of 1.04 to 0.82.
- Today’s high risk event is the Federal Open Market Committee meeting minutes in the US.
Gold Price Technical Analysis
After a massive uptrend from the $1,240 support, gold price faced selling interest above $1,295 against the US Dollar. The price formed a short term top near $1,298 and later declined below $1,285.
The 4-hour chart of XAU/USD indicates that the price was rejected near the $1,298 level, resulting a sharp drop below key supports. The decline was such that the price settled below the $1,290 support area.
More importantly, there was a break below a major bullish trend line with support at $1,288. The price traded towards the $1,276 level and later recovered. However, the broken trend line and the $1,295 level acted as a solid resistance.
A fresh decline initiated and the price moved below the 76.4% Fib retracement level of the upward move from the $1,276 low to $1,295 high. The current price action is bearish and it seems like the price may continue to decline towards $1,270.
An intermediate support is $1,272 and the 1.236 Fib extension level of the upward move from the $1,276 low to $1,295 high. On the upside, an initial resistance is at $1,288 and $1,290. However, a proper break above $1,295 and $1,298 is needed for more gains above $1,300.
Today’s FOMC meeting minutes in the US could impact gold price in the short term for a drop to $1,270 or a rise to $1,295. Similarly, major pairs like EUR/USD, GBP/USD and USD/JPY might be volatile in the coming sessions.
Economic Releases to Watch Today
- Euro Zone Unemployment Rate for Nov 2018 – Forecast 8.1%, versus 8.1% previous.
- BoC Interest Rate Decision – Forecast 1.75%, versus 1.75% previous.
- FOMC Meeting Minutes.