Gold prices
The Spot Gold price continues to tread water in a tight range as the market awaits the decision from today’s FOMC meeting.
The Federal Open Market Committee is not expected to adjust the interest rate policy in today’s meeting. However, there are growing concerns that the threat of runaway inflation will need to be addressed shortly. As the economy runs hot and financial conditions remain historically easy, the chances of distortions in asset prices cannot be ignored. How will this affect the Gold Price outlook?
A lot will depend on what Fed Chairman Powell says to reporters in the press conference following the decision. The Fed is currently sticking to the stance that any inflation will be transitory and will smooth out in due course.
‘Bond King’ Jeff Gundlach is not convinced. He voiced his concerns to Bloomberg:
“I’m not sure why they think they know it’s transitory… how do they know that?”
“…there’s plenty of money-printing that’s been going on, and we’ve seen commodity prices going up massively… home prices in the US are inflating very substantially… so there’s a lot of inflation that’s already baked into input prices.”
Should the FED continue on the current path, we are likely to see a bid in Bullion. This should be enough to push the Spot Gold price back above the $1,800 resistance level. Any mentioning of policy tightening or a ‘taper’ could prove disastrous for the yellow metal.
The Gold price has performed poorly when compared to it’s peers. Since making an All-time-high in August 2020, the market has been on a continued downwards trajectory. The current spot gold price sits at $1,775, some 15% below that ATH.
As you can see on the Daily Chart. The Gold price has been in an uptrend since the formation of the recent double-bottom,
The recent strength, however, did not have enough momentum to take the price through the psychological $1,800 barrier and the 100-Day Moving average at $1,801.
Support now sits at the lower end of the ascending channel at $1,770. Failing that, the next important marker is the 50-Day MA at $1,744.
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