Gold Price Forecast – FOMC Forward Guidance under Focus


Gold markets remain stabilized. The global sentiment seems quite disturbed over the rising coronavirus fears. In China, more than 132 deaths have been noted until now.

Panic investors have started rushing into safer assets like gold. However, as the Fed meeting is approaching, the stocks have shown a slight recovery today. Also, the US Dollar Index has gained strength, offsetting the gold price gains.

Meanwhile, amid virus fears and with the increase in the US Dollar Index, the Crude prices suffered severe pullbacks, touching multi-month lows.

FOMC Meeting

The gold prices have so far gathered some fresh bids ahead of the FOMC Meeting scheduled today. Most probably, the policymakers might keep the rates unchanged, saving some firepower for any future rate cut. The current threshold for the interest rates is of 1.50% to 1.75%.

Meanwhile, the recent US data came out positive because of which the USD Index benchmark soared, touching its highest since Dec. 2.

Ryan McKay, a commodity strategist at TD Securities, said, “The durable goods number was better-than-expected so that could be increasing the chances that the Federal Reserve would not be dovish in the FOMC meeting and that is weighing on prices.”

Technical Analysis

1-Day Chart

The precious metal prices have rebounded from the previous day’s closing. However, an overhead solid resistance line near $1571.73 continues to instill, blocking the upper side.

XAUUSD 1 Day 29 Jan. 2020
XAUUSD 1 Day 29 Jan. 2020

Anyhow, the overall momentum seems appealing and must be sufficient for an immediate surge. Also, the underlying Parabolic SAR continued to cheer the gold bulls. In that case, with a upside move, the following resistances will get activated –

  • $1577.51
  • $1583.79
  • $1594.57

Meantime, on the lower side, key support lines remain near –

  • $1553.34
  • $1546.42

4-Hour Chart

On the smaller timeframe, things appear bit pessimistic. Stochastic Oscillator was revealing that the overall momentum seems to drop below 50 optimal levels. And, the Parabolic SAR was moving above the pair, strengthening the pair bears.

XAUUSD 240 Min 29 Jan. 2020
XAUUSD 240 Min 29 Jan. 2020

Needless to say, the SMA confluence made up of 50-day and 100-day SMAs, continue to stay just below to the XAU/USD pair, acting as a support cushion. Also, the most significant long term 200-day SMA was hovering near $1528 levels.

Furthermore, on the downside, I can trace a one-week-old slanting support line above the aforementioned SMA confluence. So, if the XAU/USD pair happens to make a sudden flight to the north side, then it might encounter resistance stalled near $1583.44 level.