Gold struggles to shine ahead of central bank decisions
James Chen, CMT September 20, 2016 1:05 PM
Against this backdrop, the price of gold has dropped to a key support level at a major rising trend line that extends back from the $1050-area multi-year lows of late last year. This trend line has been tested and respected on several occasions, providing strength to gold’s uptrend of the past nine months. As of Tuesday, price has tentatively turned back to the upside from this trend line support after a week and a half of falling sharply.
Could Wednesday’s central bank decisions serve as catalysts for a rebound off support for gold and a continuation of the entrenched uptrend? Most importantly, this would likely be contingent upon the Fed refraining from raising rates as well as taking on a more dovish-than-expected tone, which, in turn, should place some immediate pressure on the US dollar. If this occurs, there could likely be a gold rebound off trend line support, with the next major upside targets at the $1350 and $1375 resistance areas. In the event of more hawkish-than-expected talk from the Fed, however, a gold breakdown below the support trend line could occur, in which case the next major support area to the downside is around the $1250 level.
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