Gold prices are still more than 110% above last year’s lows, and in late-November we saw gold break out of another symmetrical triangle that made up a bull pennant formation. But for the past week, it’s been largely range-bound as traders and investors gear up for the final Fed meeting of the year. While the Fed has been widely-expected to cut rates, it’s the bank’s forecast for next year that will likely drive the flow, and even then, there’s an asterisk that can be placed on the matter as a Fed looking a bit more-hawkish than market expectations can be qualified by the fact that a noted dove is expected to be nominated as Fed Chair next year.
For what it’s worth, the range has been rather clean, with multiple hits of both support and resistance at 4180 and 4250, respectively.
Gold Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
Gold into FOMC
While a rate cut at today’s Fed meeting is widely-expected, the larger focus is next year, and whether the bank highlights the 50-75 bps in cuts that rates markets have been building hope for.
It was around the October FOMC meeting that gold set the recent low and prices quickly pushed above the $4k level after that meeting, even though Powell had tamped down hopes for a December cut by saying that it wasn’t a foregone conclusion.
The breakout in gold hit when another FOMC factor came into play as it was spreading that current Director of the National Economic Council would be Jerome Powell’s successor at the Fed, and Kevin Hassett has an extended history as a dovish-leaning economist. This is perhaps a key driver for those rate cut expectations next year, despite the fact that Jerome Powell has been less effusive around the topic of rate cuts which has led to a bullish response in the Dollar around FOMC meetings. I spoke about this at-length in the weekend video and that will be on display for the Fed meeting today.
In gold, this can present pullback opportunity if Powell does shake out bulls, with 4145 and 4100-4110 supports sitting below current price.
Gold Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
