Gold price is trading slightly higher in today’s Asian session as investors square their positions ahead of the FOMC rate decision. XAUUSD is currently trading almost $4 from its opening price at $1,710.30.
Due later today at 7:00 pm GMT, the FOMC which is the monetary policy-deciding body of the Federal Reserve will announce its interest rate decision. With interest rates close to zero, there are no changes expected on this from the central bank. The Fed has also offered a handful of lending facilities to assist consumers and businesses amid the coronavirus pandemic.
So what else is there to watch out for? Market participants are looking forward to knowing how long rates would stay at their record-lows. Historically, the central bank does not anchor it on a specific time. Instead, it would base its decision to shore up liquidity on economic indicators like unemployment. If the Fed’s target seems achievable within the next 12 months, XAUUSD could trade lower. On the other hand, XAUUSD may rally if forward guidance suggests that it will take a significant amount of time before the Fed expects the economy to recover.
On the 4-hour time frame, it can be seen that gold price seems to have bounced off support at the rising trend line. This price, around $1,700.50, also coincides with the 100 SMA. Since then, XAUUSD has consolidated.
A closer look at the hourly time frame shows what looks like a double bottom chart pattern at the trend line. This is characterized by the market getting rejected twice at a support level. Now, this is widely considered as a bullish reversal pattern. What this means is that a bullish close above neckline support around $1,712.81 could mean a potential rally to recent highs at $1,736.11.
On the other hand, a strong bearish close below yesterday’s low at $1,691.64 would invalidate this chart pattern and the rising trend line. Instead it could mean that XAUUSD is headed lower to $1,662.42 where it bottomed on April 21.More content