Gold Prices Hold Tight Range Ahead of FOMC, North Korean Summit

Fundamental Forecast for Gold: Neutral

Gold prices inched aloft this week with a changed steel adult scarcely 0.30% forward of a New York tighten on Friday. The gains come amid continued strength in U.S. equity markets with a SP 500 dire aloft for a third uninterrupted week. A newfound debility in a US Dollar has continued to put a building underneath bullion prices with a DXY down scarcely 0.7% this week.

FOMC Rate Decision Takes Center Stage

It was a still week for mercantile information though things collect adult subsequent week with executive bank rate decisions from a FOMC, a ECB (European Central Bank) and BoJ (Bank of Japan) on tap. The Federal Reserve is widely approaching to travel a benchmark seductiveness rate by 25 basement points and a concentration will be on a updated mercantile projections as they associate to growth, practice and inflation. For gold, a hawkish tinge from a executive bank could import on direct for non-yielding resources like gold. However, with flourishing concerns per a ascent tellurian trade war, Fed Chair Jerome Powell Co might leave a doorway open for a some-more light normalization routine if a dot tract reaffirms expectations for only one some-more travel this year- such a unfolding would expected be bullish for gold,

North Korean Summit – The “X” Factor

Further highlighting eventuality risk subsequent week will be a rarely expected assembly between President Trump and North Korean Leader Kim Jong Un for a Nuclear Summit- an X cause for traders that could be a large motorist of near-term risk perspective (depending on how things go). For gold, these events have a intensity to fuel a mangle of a multi-week operation in price. Keep in mind that notwithstanding all a sensitivity seen in prices in 2018, bullion is down only 0.5% year-to-date and from technical standpoint, we’re looking for a dermatitis a near-term converging operation to offer guidance.

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Spot Gold IG Client Positioning

Gold Trader Sentiment

  • A outline of IG Client Sentiment shows traders are net-long Gold- a ratio stands during +3.93 (79.7% of traders are long) –bearishreading
  • Long positions are 2.3% reduce than yesterday but1.2% higher from final week
  • Short positions are 5.9% aloft than yesterday and 5.7% aloft from final week
  • We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests Spot Gold prices might continue to fall. Yet traders are reduction net-long than yesterday and compared with final week and a recent changes in perspective advise that a stream Spot Gold cost trend might shortly retreat aloft notwithstanding a fact traders sojourn net-long.

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Gold Weekly Price Chart

Gold Price Chart - Weekly Timeframe

Gold prices have continued to trade in a contractionary operation only subsequent yearly open insurgency during 1302 with support eyed during a 61.8% retracement of a Dec allege during 1285. A weekly tighten subsequent this turn targets longer-term upslope support around ~1255 corroborated closely by a 50% retracement of a late 2016 allege during 1245.

Bottom line: It’s make-or-break during these levels and we’re looking for a dermatitis of this operation streamer into subsequent week. Note that a final few times that weekly RSI has depressed to these levels, cost has recovered and adds serve stress to a stream movement profile. For a finish technical relapse of a near-term Gold cost levels (daily intraday), examination this week’s XAU/USD Technical Outlook.

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—Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or hit him during mboutros@dailyfx.com

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