Gold became less volatile ahead of the Fed rate announcement

After reaching two-month highs, gold prices haven’t yet demonstrated sudden jumps. Recently, quotations of the yellow metal have been growing steadily but never approached the important level of $2000.

The main reason for price fluctuations of the precious metal is its inverse correlation with the U.S. dollar. As inflation slows down and expectations about the end of interest rates increase in the USA appear, the dollar loses its attractiveness for market participants.

Besides, news about the probable creation by BRICS countries of a new currency backed by gold also supports the demand for the yellow metal.

Today, precious metal prices fluctuate in a narrow range as traders refrain from opening big options ahead of the Fed interest rate decision. The news was released at 18:00 GMT.

According to the CME FedWatch Tool, most investors expect the rate to remain in the 5.25 – 5.5% range until the end of 2023. At the same time, 35% assume the likelihood of another 25 basis point hike in November.

Now comments from central bank officials are more important for the gold market, and they will determine the immediate future of the metal's value.

If the regulator reveals its intention to suspend the cycle of rate hikes, gold will have a chance to start a steady growth. However, there will be no significant growth in precious metal quotations in the next months without definitive statements about the intention to implement it or the monetary policy tightening increase.  

The gold rate forms an uptrend.

In terms of wave analysis, the price forms the third ascending wave on the H4 timeframe. Breaking through the top of the first wave at the level of 1988 will strengthen the price movement towards growth.

The nearest resistance level is at the psychological mark of $2000 per ounce.

Several important news of today may increase volatility. Therefore, the stop-loss should be set beyond the monthly correction of $1920.

Signal:

Short-term prospects for gold are buying.

Target is at the level of 2040.00.

Part of the profit should be fixed around the level of 2000.00.

Stop-loss is around the level of 1910.00.

The bullish trend is short-term, so choose a trading volume of no more than 2% of your balance.