Fed Wednesday`s meeting is a crucial driver!
While Gold ended last week with a positive sentiment, this week started with a downward movement. However, the condition is so mixed that investors and traders mostly wait for Wednesday`s Fed announcement.
Last week`s price rise was primarily due to increasing recession concerns, as more tightening policies mean more pressure on the weakened economy. The fear of recession also decreased the yields, giving Gold a chance to rise. With increasing the recession fear, we can also expect less hawkish policies, so at the same time as the bond yields decrease, the US dollar also gets weaker to lift the yellow metal price against the USD.
To remind you, higher interest rates pressure gold prices since assets yielding interest become a more attractive investment than Gold.
This week we will have the inflation numbers on Tuesday and Fed announcement with Fed chair Powell`s speech on Wednesday. However, market participants can mostly wait until Mr. Powell`s conference to decide. On top of that, remember Thursday`s BoE and ECB policy meeting.
As shown in the bellow figure, Gold moves in a clear bullish channel in the Daily chart. The main pivot level sits at 1,720 US dollars (20-DMA), while further resistance may be encountered at $1,810 per ounce.
