Gold Prices (XAU/USD) Stutter ahead of FOMC – All Eyes on the Fed

Gold, FOMC and US Dollar Talking Points:Gold prices falter ahead of FOMCXAU/USD shrugs off UK CPI data – All eyes on the FedUS Dollar strength remains a key catalyst for the imminent moveGold Prices Seek Clarity From the FedGold prices have shrugged off a higher than anticipated UK CPI print as investors shift their focus to the FOMC rate decision later today. Visit the DailyFX Educational Center to discover how CPI data affects currency pairsAs a hedge against inflation, a shift in risk sentiment and a more hawkish rhetoric from Fed chair Jerome Powell have continued to weigh on Bullion as investors price in the probability of a sooner than anticipated rate hike in an effort to control inflation.Although the Fed, BoE (Bank of England) and the ECB (European Central Bank) all remain under pressure to tackle the effects of inflation, the rapid spread of the Omnicron variant has once again forced governments to consider implementing tighter restrictions which may further hinder the pace of economic recovery and in turn, the pace of tapering.DailyFX Economic CalendarIf central banks maintain a more accommodative stance, Gold prices have the ability to move higher, at least temporarily.Gold Price AnalysisAt the time of writing, Gold prices are trading within a confluent zone, between key Fibonacci levels of both the 2020 and 2021 move.After falling below channel support late last month, US Dollar strength and expectations of rate hikes have allowed bears to drive price action back towards critical support, currently holding firm at the key psychological level of $1,760 which coincides with the 50% retracement of the 2020 move.Meanwhile, the commodity channel index (CCI) has fallen back towards the lower bound of the range, a potential indication that the downward trajectory may continue to persist, at least for now.Gold Daily ChartChart prepared by Tammy Da Costa using TradingViewGold Weekly ChartChart prepared by Tammy Da Costa using TradingViewGold SentimentGold: At the time of writing, retail trader data shows 84.25% of traders are net-long with the ratio of traders long to short at 5.35 to 1. The number of traders net-long is 10.25% higher than yesterday and 8.62% higher from last week, while the number of traders net-short is 16.43% lower than yesterday and 18.73% lower from last week.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.— Written by Tammy Da Costa, Analyst for DailyFX.comContact and follow Tammy on Twitter: @Tams707
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