Gold sell

The gold uptrend may be broken after the Fed meeting

01 February 2023 67
Denis_Shavkun
Denis_Shavkun

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Metals"
2nd in the segment "Oil and gas"

Yesterday the gold price showed a significant decline in the morning. Quotes fell to the level of 1900 dollars. The drawdown started to be bought out from this support level. As a result, yesterday's trading closed on the plus side not only for gold, but also for all commodities as well. Today the gold volatility was subsided, so market participants are waiting for one of the most important events of the week — the Fed's decision on further monetary policy with comments from the committee's representatives.


Despite the current uptrend, Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said the price of gold is likely to be volatile.

Traders predicted a 25 basis point Fed rate hike to the 4.5% to 4.75% range. They expect rates to peak at 4.9% in June.

As it was mentioned above, the weakening pace of rate hikes has been played back by the market over the past few weeks, so the market reaction will be subdued. The comments from the Fed and the ECB will be put at the heart of this week. There we might hear the rhetoric again that there is no need to rush with rate cuts.

Regulators may say again it is better to keep rates at current levels for a longer period in order to "anchor" the inflation rate accurately. Similar comments have been heard in recent weeks, despite positive inflation data. This scenario may be negative for both gold and silver.


Gold made a downward strike of the medium-term uptrend and the rectangle, which was indicated earlier in forecasts. Lately, there was a powerful buyback. The same dynamic was in all commodities, what underlines an increased correlation of gold with other assets rather than protecting the uptrend. Therefore, we assume a new attempt to reach this uptrend. As the Fed meeting is planned for today, the market volatility may be high. So it would be better to put bold stops after each trade.

The downside target will be at yesterday's low around $1902. That level was implemented as a supporting line for the gold price several times. A stop-loss may be placed when the upward cross from the rectangle at the level of $1,945.


The gold price decline

Take profit – 1 902

Stop-loss – 1 945

This content is for informational purposes only and is not intended to be investing advice.

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Denis_Shavkun
Denis_Shavkun

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Metals"
2nd in the segment "Oil and gas"
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