Where to Next for Gold?

With another 25-basis points rate hike from the US Federal Reserve Bank in the bag, the 11th out of the last twelve meetings, market participants becken the question, where to next for Gold?

US interest rates are elevated at 22-year highs, and it might not be over by a long shot as Fed Chair Jerome Powell left the door open to more rate hikes. Powell also mentioned in the press meeting that Fed economists are no longer forecasting a recession this year, which has seen the SP 500 shrug off the rate hike and continue to push higher.

Looking at the US Dollar Index (DXY)

Surprisingly the US Dollar (USD) did not welcome the rate decision as one would think, as the market is now pricing in a 78% chance that yesterday’s hike will be the last of 2023, leaving the Greenback exposed to the downside. The chart below shows that the Spot price of Gold (gold line) is also diverging from the US Dollar (blue line), which could boast well for gold traders and investors.

Gold Spot (XAUUSD)

When looking at the Gold spot price action below, we can see that the price action has broken out of the falling wedge technical pattern and has pushed higher. The price action has also pivoted at the $1951/ounce level (solid black line), supporting the price and the 50-day SMA (blue line).

The price action is currently at a significant resistance point around $1983/ ounce, and if the price moves higher from here, the psychological $2000/ ounce (green line) becomes a focal point.

Sources: Bloomberg, Koyfin, TradingView

Piece written by Barry Dumas

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