Gold Weekly Analysis: It’s all about FOMC next week. May (23-27)

Gold has reversed quite well in the last few days, and weekly candle closed in a bullish. A few days ago, Gold broke the long-term trend line support and tested $1786. However, it did not last long. Gold reversed sharply last week, largely due to a drop in US Treasury bond yields and China withdrawal its Covid restrictions.

However, I still think it's not the right time to say that Gold has completely gone uptrend again. But next week at FOMC we have a clear idea of whether Gold will rise above from its current position to $1900 or will drop again below $1800.

On the basis of both fundamental and technical analysis, it can be said that Gold is still at the hesitation level. That means Gold could rise from this position if US Treasury bond yields drop next week. If the Fed makes a more aggressive statement next week, as it did before, Gold is likely to fall below $1800 again.

On the other hand, if we consider the technical analysis, it is seen that Gold is still close and above to the strong trendline support. Although the chart shows that the trend line has risen slightly in the support level, since it is very close, it cannot be called a clear breakout. Again, $1860 was strong support before, naturally it will now act as strong resistance now. So, I don't think it will go $1900 unless there is a clear break out of $1860.

Again if you see the weekly candle closing reverse full bullish candle from the support. This means that even if gold make some corrections at the beginning of the week, the chances of getting go up by the end of the week are very high.

This is why I have considered everything and said that Gold is now at the hesitation level. In other words, just as there is a chance for gold to rise from here, there is also a chance for it to go lower. But everything is depending on is next week's FOMC.

Next week we will know from FOMC whether the gold will go below $1800 again or will come close to $1900.

Now let's talk about what could happen next week at FOMC. It is clear that the Fed will raise rates by 50 bp in the next two meetings. Now the question is whether the dollar will benefit if the Fed raises 50 bp? In my opinion, 50 bp has already been priced in, so I think if the Fed just stays above the 50 bp increase in the next FOMC, Gold will not drop much, on the contrary, it is more likely to go up with a little drop.

But if the Fed talks of a 75 bp rate hike, there is no way Gold will go straight below $1800. Or if they say that by 50 bp they will increase the rate throughout the year then the same thing can happen. In my opinion, there is less chance of either of them appearing. Let's see what the Fed decides in FOMC, we will decide in the long run whether it is above it or not.

Technical View

From the present rates, Gold’s strong support is $1835/1830. If gold breaks below $1835/1830, gold may test 41812/1810. Breaking below $1810 will open the door for $1800 and finally strong support level of $1790/1785.

On the other hand, immediate resistance is identified at $1860. From the present rates gold has chances to test $1860 again. But as long as below $1860, it won’t go in long term uptrend. If anyhow, gold manage to break out of $1860, it may test again $1900 price zone.

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