Gold Strong on US Fed Uncertainty and BOJ’s Stimulation
After Wednesday’s FOMC statement Gold fell on mildly Hawkish notes of the statement.
Then, as the markets digested the Fed’s characteristically non-committal comments that gave no indication as to the potential timing of a future rate hike, the precious Yellow metal surged on the continued interest rate uncertainty.
Before Wednesday’s move North, the price of Gold had been in retreat, pulling back (consolidating) the new 2-year high around 1375 marked less than 3 weeks ago.
From a technical outlook, Wednesday’s Fed-driven spike preserved Gold’s uptrend that has been in place since the end of May. This shorter-term uptrend, which is supported by a clear 2-month trend line, lies within the context of a larger parallel uptrend channel that extends back to the 1050-area lows of late last year.
So, if Gold is able to remain above both its 2-month trend line as well as the Key 50-Day MA, the prevailing easing trend of global central banks along with the prolonged hesitation by the US Fed to raise interest rates could lead to an extension of the precious metal’s medium-term uptrend.
If that is the case,the price of Gold again will target the the 1375 high. With breakout above that high mark, the next major Northside resistance target is at 1420.
But, if there is a sustained breakdown below the 2-month trend line and 50-Day MA, strong Southside support resides at the lower end of the parallel uptrend channel.