Will the FED turns Gold into the Red?
For Gold, in the week ahead, everything will be about the FED policy meeting. Gold can start a long-term rally for a 2K area or a downside rally on the flip side that can send it to a 1,600 site; how and why?
Gold is one of the most trusted Safe-havens against Inflation, and since we are about to record a worse situation in the past 35 years and inflation rising way faster than expectations, Gold will be one of the options to change with our cash. Next week we will have the essential FED meeting since last year when they eased the rates sharply, and now we are waiting for the way back to the pre-pandemic interest rates level. It will not be with the same lowering speed; however, raising the rates must sometimes start not too late.
Different researchers. Polls and signs, telling us that in the coming week and meeting, most probably Mmes Bowman, Brainard, Daly and Messrs Barkin, Bostic, Clarida, Evans, Powell, Quarles, Waller, and Williams will be voting to hold the 0.00%-0.25% target rate and else will be supporting to bump it up to 0.25%-0.50%. Besides, that tapering can be another idea. However, since the majority supporting the holding policy, we are not expecting any changes in the FED policy. However, guidelines for future ease and its possible starting date are the main questions.
Friday, the closer we were to the closing hours, the market was getting realistic, and the yield curve started rising more to 1.45% from 1.43% low. DXY also closed above 90.50, the highest level since 4th May. Both of these numbers can support the market fears and Gold's Bull.
On the other hand, if the FED statement keeps remaining its ultra dovish tone and Powell in the press conference emphasized that they will support the market and stay fully committed to lower rates as long as the labor market needs and do not believe that higher rates are there to stay for longer-term, stocks will move higher. Safe-have demand will ease, as well as interests in Gold.
Gold technical review
In the daily chart, RSI at 53, with the price side movement between 1,870 and 1.904, can not confirm enough power for the market bulls unless if price can move higher than 1,904, which in that case, the OBV trend line also will change the form from flat move to an uptrend. On the flip side, breaching under 1,870 will open the doors for 50-DMA at 1,830 US dollars.
