Gold is chipping away at key trendline hurdle as investors assess Fed outlook

• Gold is chipping away at the trendline connecting the Oct. 26 and Nov. 7 high. The trendline has proved a tough nut to crack in the last two days.
• The widening gap between the Fed rate projections and investors’ expectations of where the rates would be 12 months from now could bode well for the yellow metal.

Gold is currently trading at the stiff resistance of $1,227 – falling trendline resistance.

A convincing break above that level would signal a continuation of the rally from the Nov. 13 low of $1,196.

Notably, the bullish breakout is likely to happen as investors are worried that the global growth slowdown may hit the American shores, forcing the Fed to abandon its forecast of three rates in 2019. As of writing, futures are pricing in at least 2 ½ hikes through 2020. Meanwhile, as per Fed’s forecasts, interest rates could go up by 100 bps by December 2019.

That widening gap between the market expectation and Fed projection is negative for the US dollar – gold’s biggest nemesis.

So, it seems safe to say that for gold, the path of least resistance is on the higher side.

Gold Technical Levels