XAU/USD Outlook: Gold Prices Temporarily Pull Back to $1,732 After FOMC Keeps the Rate Unchanged
Gold prices fall to $1,732 from $1,739.95, the highest recorded since June 2, during Thursday’s early trading. Despite its recent surge, the yellow metal slightly weakened as the USD strengthens.
The greenback appears to gain from the recent US-China strains, along with the extensive risk-aversion tone while rebounding from the 3-month low.
In contrast, the gold prices may have profited from its inverse relationship with the USD to show the greenback’s earlier losses.
Effects of FOMC Meeting
Following the US Federal Open Market Committee (FOMC)’s decision to keep the rate unchanged, the US dollar index (DXY) plunged to the bottom since March 10. The Fed policymakers additionally foresee no rate change until 2022, unless otherwise necessary.
With this week’s key meetings already done, gold investors are unlikely to observe any significant moves. Nonetheless, the US-China news and the present US Jobless Claims, accompanied by Friday’s Michigan Consumer Sentiment Index, could engage the exchanges.
Gold shows a bullish trend and favors the further upside past $1,700. If the bulls keep the gains until above $1,765, the shift to risk tone-off could increase the ammunition and challenge the late-2012 highs to focus on the $1,800 mark.
On the other hand, a drawback break of the resistance-turned-support, currently at $1,732, can get the quote towards meeting $1,700 and afterward the 50-day EMA level of $1,696.50.
In the short term, there are a few opportunities that traders can look out for. For instance, the $1719.84 to $1712.75 levels is a pretty crucial range to look out for in the lower timeframes. Depending on the reaction of the yellow metal, it may be possible for a bounce upward if ever price decides to retrace on these levels. This is pretty likely because the Gold is still in a long term uptrend.
However, it is important to be a little bit cautious because the USD is still recovering. Once market structure gains its course, it is possible to find better opportunities.
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