Gold futures jumped over 1% on Tuesday as risk appetite subsided with cautious investors awaiting clarity on the state of the economy and further stimulus from the U.S. Federal Reserve’s policy meeting.
“The expectations of further Fed stimulus are in the forefront of what’s been supporting gold over the last couple of days. In addition, we’re also seeing global equities tick lower slightly across the board,” said David Meger, director of metals trading at High Ridge Futures.
At 17:41 GMT, August Comex gold is trading $1721.20, up $16.10 or +0.94%.
Market participants are now looking at the U.S. Fed’s two-day policy meeting, which ends on Wednesday, but have stopped pricing-in the possibility of negative interest rates after Friday’s jobs report.
Gold bulls are also reacting to the possibility the Fed may try to flatten the yield curve after Treasury yields rose sharply last week in response to stronger-than-expected U.S. economic data especially the surprisingly robust May U.S. Non-Farm Payrolls report.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $1761.00 will change the main trend to up. A move through $1671.70 will signal a resumption of the downtrend, while taking out $1668.40 will reaffirm the downtrend.
The minor trend is also down. Tuesday’s rally, however, turned $1671.70 a new minor bottom.
The short-term range is $1789.00 to $1668.40. Its 50% level at $1728.70 is controlling the near-term direction of the market
The main range is $1454.80 to $1789.00. Its retracement zone at $1621.90 to $1582.40 is the primary downside target and value area.
The near-term direction of the gold market is in the Fed’s hands right now. If policymakers send a bullish message then look for a breakout over $1728.70 with $1761.00 the first major upside target.
A bearish Fed message will likely drive the gold market into $1671.70 to $1668.40. The latter is the potential trigger point for an acceleration into at least $1621.90.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Oil Continues Its Pullback As Demand For Riskier Assets Declines
- AUD/USD Forex Technical Analysis – Forming Potentially Bearish Closing Price Reversal Top
- US Stock Market Overview – Stocks Close Mixed, Nasdaq Closes at All-time Highs
- Gold Price Prediction – Prices Rebound as the Dollar Continues to Slide
- Does the PBoC Store Gold at the Fed In New York?
- E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Grinding to New Record High Ahead of Fed