- Gold technicals are neutral, with price leaning bearish on bids through the greenback, (Powell headlines induced).
- Bulls need to get back above the 21-D SMA at 1296 again.
- All eyes turn to the FOMC outcome on Wednesday.
The precious metal was offered below the psychological $1,300 level on Tuesday due to the risk-on outcome in markets, as an agreement between the U.S. and North Korea aimed at denuclearizing the Korean Peninsula pulled the safe haven bid from Gold, ahead of an expected interest-rate hike by the Fed.
The US dollar also got a boost by the market buying it up in speculation that Fed Chairman Powell will be holding a press conference after every FOMC meeting. However, these were headlines from various outlets, including the WSJ that explained Powell was ‘considering’ doing so. He may judge that it is not worth his while. However, for the time being, it has underpinned the notion that the Fed is about to hike twice before the year is out and are shifting ever more hawkish. As a result, the DXY rose to 93.9110 from a low of 93.4680. US 10-year yields were barely affected and stayed in the middle of the day’s range of between 2.94%-2.98%.
As for data, the consumer-price index has rose 2.8% in the past 12 months, up from 2.5% in April and was the highest level since the start of 2012. The yearly increase in the core rate moved up to 2.2%.
FOMC preview:
While the market expects a 25bp rise or for the Fed to hold, leaving room for hikes later in the year, Valera Bednarik, chief analyst at FXStreet argued, what would be tradable, and could have the “surprise factor” is the accompanying statement:
“The wording in the document is what will let investors know what the future may bring and a reason to rush into pricing it in. What the market is actually expecting right now, is the dot plot to remain at three hikes for the year, while no clear picture will likely emerge for future years.”
Gold levels
Gold remains in a sideways range and directionless, (leaning slightly bearish on positive moves in the dollar), while submerged by neutral MAs and flat RSI longer term. The 100-W SMA is a key downside target at $1,277. While, on the flipside, $1,324 remains key upside target on a breakout of the consolidating around the $1,300 handle and holding above the previous weekly low down at $1,282. Bulls need to get back above the 21-D SMA at 1296 again for eyes to turn towards 200-D SMA, 1307, ahead of the 100-D SMA, (1324), that guard a reversal to the key 1360 level.
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