Gold
prices have been recovering since the beginning of the week thanks to
the decline in the US dollar. The price of gold has gained a little more
than 1% since Monday morning after hitting a one-month low below $1,750
due to the rising greenback.
Gold
prices are gaining momentum ahead of the highly anticipated conclusion
of the FOMC meeting tomorrow night. This meeting is particularly
important for investors as they await not only the Fed's tapering
timetable, but also the new FOMC rate projections.
The
new FOMC projections will be key for the markets. With inflation rising
above their expectations, some FOMC members may raise their outlook for
Fed rates in the coming years, which could cause investors to fear that
the Fed's monetary policy is too tight.
In
this scenario, risk aversion would not benefit gold. On the contrary,
an overly tight monetary policy would mean that bond yields would rise,
which would also put pressure on gold (in addition to stocks and bonds).
In fact, gold would strengthen in the event of a dovish tone from the
Fed.
From
a technical perspective, gold is poised to form an inverted head and
shoulders bullish reversal pattern on Tuesday. Gold will need to firmly
break above its short-term resistance at $1,767 to validate this
technical pattern and adopt a bullish outlook.
The
“inverted head and shoulders” reversal pattern would pave the way for a
bullish reversal in gold to around $1800 in the near term.
Note
that gold is also attempting to break out of its hourly Bollinger Bands
at the top, which would be an additional bullish signal on an hourly
close.
(Chart Source: Tradingview 21.09.2021)
The bullish outlook would be invalidated in the event of a pullback below the “right shoulder” support at around $1760.
Disclaimer:
This material has been created for information purposes only. All views
expressed in this document are my own and do not necessarily represent
the opinions of any entity.
举报电话: 13816368049
