On Tuesday (September 19th), after rebounding and rising in previous trading days, spot gold slackened its momentum and closed slightly lower near $1930 in late New York trading. Traders are currently quietly waiting for the results of the Federal Reserve's interest rate meeting on Wednesday night.
For gold, the Federal Reserve, which will hold a monetary policy meeting within the day, is undoubtedly of utmost importance. The market generally predicts that the Federal Reserve will temporarily suspend interest rate hikes this week, but more importantly, it is the dot chart and official economic forecasts. Erik Weisman, Chief Economist and Portfolio Manager at MFS Investment Management, said, "The market has completely digested the expectation of keeping interest rates unchanged, and since the Federal Reserve suspended interest rate hikes in June, this meeting is likely to be the same. In fact, it is shifting towards the rhythm of raising interest rates every other meeting." Many institutional analysts believe that the Federal Reserve is unlikely to change the current interest rate, But everyone's attention will be focused on Federal Reserve Chairman Powell's insights into inflation risks. Although the market generally expects Powell to emphasize the continued threat of inflation, he may express a "wait-and-see" attitude. Low global gasoline and diesel inventories pose short-term risks to inflation targets, and if the Federal Reserve chooses to further raise interest rates to control inflation, this situation may affect the attractiveness of gold. Gardner from Kaitou Macro said, "There is room for further decline in gold prices this year, as investors' demand for gold as a hedge against economic uncertainty and high inflation has actually decreased." The holdings of the world's largest gold backed exchange traded fund, SPDR Gold Trust, were close to an eight month low last week. Therefore, in the short term, the outlook for gold remains uncertain, swaying between bullish and bearish sentiment. The market is eagerly waiting for the central bank to release clues on monetary policy adjustments, especially the decision to be made by the Federal Reserve on Wednesday. Given the global focus on inflation and interest rates, gold is in a predicament, and its fate is closely related to the upcoming central bank statement.
On a technical level, after rebounding from the $1900 level, gold prices are still around the high point of their recent rebound. Before the Federal Reserve announces its decision, gold prices may maintain a narrow sideways consolidation trend. After waiting for the outcome of the meeting, see which direction to push the gold forward. The support range below is between $1900 and $1920, while the resistance range above is between $1950 and $1975. Breaking through any of the above paragraphs will determine the general trend of gold in the next stage.
