Gold prices

Gold price loses its lustre ahead of next week’s upcoming FOMC meeting

A failure to break the $1,800 per ounce level saw the spot Gold price succumb to selling pressure ahead of next week’s much anticipated Federal Reserve Meeting.

All eyes were on the $1,800 level last week. Twice Gold had attempted to punch through, and twice it had failed. Friday saw a fresh attempt to hurdle the important big figure. However, prices retreated, finishing lower for the second consecutive day.

The Gold price reached an intraday high of $1,795.94 before the better-than-expected new home sales data sent the market tumbling 1.3% to a low of $1,770. By the close of play, the price had recovered somewhat to settle at $1777.11 per oz. This showed a decline of $6.88, or 0.39% from the previous day’s close.

The market now looks ahead to next week’s monetary policy meeting. Whilst interest rates are expected to remain the same, traders will take cues from the Fed Chairman Powell’s press conference following the decision.

Gold price outlook

Gold is considered an effective hedge against inflation. Of late, the market has done little to justify the label. During the current inflationary cycle, the market has performed poorly against its peers.

The price of spot Gold has increased a paltry 3.48% over the last year and has shown investors a negative return of -9.21% from the highs of January 6th, 2021.

Technically the market is running into overhead resistance. The 50-day moving average sits slightly above last week’s high at its current level of $1,802. This important average sits juxtaposed with the upper band of an ascending wedge formation, in place from the March 31st lows.

Should the Gold price breach the $1,802 level, we look to $1820 as the next resistance level.

Support can be found at the lower band of the ascending wedge, around Friday’s low of $1,770. A deeper sell-off targets the 18th March 2021 highs at $1,755.

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Gold Price Daily Chart

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