Gold Price In Significant Uptrend, Fed Rate Decision Next

Key Highlights

  • Gold price climbed higher recently and broke the $1,240 resistance against the US Dollar.
  • There was a break above a major bearish trend line with resistance at $1,242 on the 4-hours chart of XAU/USD.
  • The US Housing Starts in Nov 2018 increased from the last revised reading of 1.217M to 1.256M (MoM).
  • Today, the Fed Interest Rate Decision will be announced, and the central bank is expected to increase rates from 2.25% to 2.50%.

Gold Price Technical Analysis

After finding a strong buying interest near the $1,232 zone, gold price started a fresh upward move against the US Dollar. The price rallied and broke the $1,240 and $1,244 resistance levels.

Gold Price Technical Analysis

The 4-hour chart of XAU/USD indicates that the price found support near $1,232 and the 100 simple moving average (red, 4-hours). There was a sharp bounce above the 50% Fib retracement level of the last decline from the $1,250 swing high to $1,232 swing low.

Moreover, there was a break above a major bearish trend line with resistance at $1,242. The price even surpassed the 76.4% Fib retracement level of the last decline from the $1,250 swing high to $1,232 swing low, opening the doors for more gains above the $1,250 resistance.

If the current trend remains intact, the price could extend gains towards the $1,255 level and the 1.236 Fib extension level of the last decline.

On the downside, an initial support is near the $1,244 level, below which the price could test the $1,242 support zone. Overall, as long as the price is above the 100 SMA, it remains in an uptrend and it could continue to rise towards $1,255 or $1,260.

However, today’s Fed Interest Rate Decision might impact the market sentiment for gold. Moreover, the current recovery in major pairs like EUR/USD and GBP/USD could face a strong resistance if the fed increases rates from 2.25% to 2.50%. On the other hand, disappointment may perhaps lead to a sharp dollar selling.

Economic Releases to Watch Today

  • UK Consumer Price Index Nov 2018 (YoY) – Forecast +2.3%, versus +2.4% previous.
  • UK Core Consumer Price Index Nov 2018 (YoY) – Forecast +1.8%, versus +1.9% previous.
  • Fed Interest Rate Decision – Forecast 2.50%, versus 2.25% previous.
  • Canadian Consumer Price Index Nov 2018 (MoM) – Forecast -0.2%, versus +0.3% previous.
  • Canadian Consumer Price Index Nov 2018 (YoY) – Forecast +1.9%, versus +2.4% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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