Gold Prices Grip to Support into FOMC

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

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.