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Gold continues to shine as Fed decision looms

As we mentioned the possibility in our week ahead report on Friday HERE, gold has indeed broken further higher. The safe-haven asset has been supported by (1) continued weakness in the dollar and (2) raised volatility in the stock markets, ahead of the Federal Reserve’s much-anticipated rate decision later on. Gold, like many other buck-denominated assets, is going to turn very volatile later once the Fed’s decision is made public. If the US central bank is overall deemed to be more dovish than expected, then expect the yellow metal to extend its gains even more. However, a hawkish Fed has the potential to end the metal’s rally. Whatever is the case, we will be monitoring price action closely today and will see where gold settles, before making a judgement on its next directional move. As it stands, though, the path of least resistance is clearly to the upside with prices making higher highs and higher lows. Short-term support levels come in at $1251, followed by $1237. These levels were previous support and/or resistance levels. The next potential resistance comes in around $1267, which converges with the top of its rising channel. We would only turn bearish on gold should it break below its most recent low at $1233 or forms a distinct reversal pattern at higher levels first.

Source: TradingView and FOREX.com.

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