The gold spot price (XAUUSD) looks poised for a sixth consecutive session of gains, starting the Wednesday session on the front foot ahead of the crucial FOMC meeting minutes, which are sure to give traders some insights into the monetary policy stance from the Federal Reserve. As of late, the market has largely priced out the possibility of rate cuts occurring in March or May, shifting the timeline to June. The meeting minutes could cause some directional price action if it triggers another recalibration of these expectations.
Gold has benefitted from a slightly weaker US dollar in recent sessions and ongoing tensions in the Middle East, causing continuous demand for safe-haven assets. Earlier this week, Houthi militants in Yemen claimed that they targeted two US ships with missiles in the Gulf of Aden in another round of attacks that are disrupting the shipping routes in that region. So, as we approach the second half of the week, can gold maintain its momentum?
Technical
On the 4H chart, an ascending channel has emerged following the breakdown at the descending triangle toward the end of last week. The 25-SMA (green line) made a push above the 50-SMA (green line), suggesting that the bulls are regaining the upper hand. However, the RSI approaches overbought conditions and could cap the gains in the interim.
The spot price has recently broken through the Fibonacci midpoint at $2,026.78/ounce and now approaches the 61.8% Fibonacci golden ratio at $2,035.74/ounce. This resistance level could trigger a temporary pullback within the channel, but an additional leg higher could steepen the uptrend toward $2,044.63/ounce. If the bullish momentum persists, the spot price could look toward $2,051.51/ounce in the upcoming days, where it could meet psychological resistance that caused the prior uptrend to pull back.
Conversely, if the price fails to clear $2,035.74/ounce, it could retest the Fibonacci midpoint in an attempt to break down the channel at $2,026.78/ounce. The 100-SMA (orange line) backs this support level and could create a challenging barrier, but if the sellers gain enough momentum, the price could fall toward $2,011.91/ounce, where the 25-SMA and 50-SMA could provide further support.
Summary
The gold spot price looks on track for a sixth consecutive session of gains. However, the FOMC minutes later today could alter the price trajectory, with the support at the Fibonacci midpoint of $2,026.78/ounce potentially being a crucial level to watch as the session progresses.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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