On Wednesday (December 13th) in the European market, spot gold maintained a mild rebound trend within the day, with gold prices currently reported at $1982 per ounce. On this trading day, gold traders will focus on the Federal Reserve's interest rate decision, which is expected to trigger a major gold price trend.
FXTree analyst Dhwani Mehta pointed out that before the Federal Reserve announced its interest rate decision, gold prices appeared to be in a fragile trend. Despite the bearish technical outlook in the 4-hour chart, gold prices still face downside risks.
Mehta stated that the Federal Reserve's policy decisions are crucial in driving the direction of gold prices.
At 03:00 Hong Kong time on Thursday, the Federal Reserve will announce its interest rate decision. Federal Reserve Chairman Powell is scheduled to hold a monetary policy press conference at 03:30 Hong Kong time on Thursday.
Mehta said that looking ahead, everyone's attention is focused on the decisions that the Federal Reserve is about to make, and it is widely expected that the Fed will maintain interest rates at 5.25% -5.50%. However, the comments of Federal Reserve Chairman Powell and the so-called "dot matrix" may be crucial as they can reveal more about the Federal Reserve's monetary policy outlook.
The market currently expects that the probability of the Federal Reserve cutting interest rates in March next year is about 43%, while the probability of a rate cut in May next year is about 75%.
Mehta said that if Powell and his colleagues ignore the Federal Reserve's expectation of interest rate cuts in the first quarter of 2024, acknowledge rising inflation levels, and the labor market remains tight, then with the return of demand for the US dollar, gold prices may see another sell-off.
On the other hand, if the Federal Reserve's forecast confirms aggressive interest rate cuts and comprehensively suppresses the US dollar, gold prices may stabilize and recover.
At the same time, the safe haven market environment prior to the Federal Reserve's decision will support the US dollar and curb attempts to raise gold prices.
Analysis of the Latest Technology Prospects of Gold
Mehta pointed out that from the daily chart, it can be seen that gold prices are still expected to test the 50 day simple moving average (SMA) of $1970 per ounce. On the 14th, the relative strength index (RSI) fell and was also below the 50 level, supporting the reason for further decline in gold prices.
If the bearish momentum regains traction, the 200 day moving average of $1953 per ounce will be threatened. If it falls below this level, the possibility of gold testing the 100 day moving average of $1941 per ounce cannot be ruled out.
On the other hand, Mehta added that for gold prices to achieve sustained recovery, it will require daily closing prices to break through the 21 day moving average of $2006 per ounce.
Afterwards, gold buyers will target the November 27th high of $2018 per ounce and move towards the resistance zone of $2040 per ounce.
