Gold Price Latest – Clinging on toTrend Support as FOMC Looms Into View


Gold (XAU/USD) Analysis, Price and Charts

  • Gold continues to use trend support to push higher.
  • FOMC meeting may see the US dollar slide lower.
  • IG client sentiment mixed.

The price of gold is moving higher ahead of the latest Fed monetary policy decision and commentary later in the day and is supported by a cluster of positive technical signals. Fed chair Jerome Powell’s comments post-decision will be key, especially after last month’s Jackson Hole Symposium where Powell made a noted shift in monetary policy by signalling that inflation would be allowed to run higher than the central bank’s 2% mandate to allow the economy to rebound further. US interest rates will likely be kept at current ultra-low levels for years to come, keeping downward pressure on the US dollar and boosting the value of gold.

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The daily chart shows spot gold trading back above both the 20- and 50-day moving averages and clinging onto the strong uptrend line off the mid-March $1,451/oz. low. The open above the 50-dma, the first time since mid-June, gives the recent move higher additional credibility and leaves the one-month high at $1,993/oz. made on September 1 the next upside target if the move continues. The trend support line, the 20- and 50-dma, and a series of recent lows down to $1.936/oz. may prove difficult for sellers to overcome in the short-term. All eyes on the Fed decision later today to see if the current move higher continues or breaks.

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Gold Daily Price Chart (January – September 16, 2020)

Gold Price Latest - Clinging on toTrend Support as FOMC Looms Into View

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IG client sentiment data shows 80.30% of traders are net-long with the ratio of traders long to short at 4.08 to 1.The number of traders net-long is 7.35% higher than yesterday and 1.04% lower from last week, while the number of traders net-short is 18.26% lower than yesterday and 8.42% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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