Gold: Off 10-day lows, focus on the Fed

• Gold has recovered from 10-day lows seen on Friday but may lack clear direction on caution ahead of the FOMC rate decision, due Wednesday.
• The yellow metal will likely take a beating if the Fed sounds more hawkish-than-expected, squashing bets of a Fed rate hike pause in 2019.

Gold is currently trading at $1,237 per Oz, having hit a low of 10-day low of $1,233 on Friday.

The yellow metal fell close to 2 percent last week as the American dollar – its biggest nemesis – picked up a haven bid last Monday and rose to a fresh 2018 high of 97.71 on Friday.

The greenback will likely extend the rally later this week, sending gold lower, if the Federal Reserve sounds less dovish-than-expected. Markets expect the central bank to hike rates by 25 basis points (priced in) and signal a wait-and-see approach for 2019.

A few months ago, the central bank signaled three rate hikes for 2019, something which markets did not buy.

Gold, however, could rise well above the 200-day moving average (MA) hurdle of $1,256 if the Fed cements expectations of a rate hike pause in 2019, sending the treasury yields and the US dollar lower.

Gold Technical Levels