Gold Hangs Near Weekly Lows Ahead Of The Pivotal FOMC Decision

1. Gold Hangs Near Weekly Lows
Ahead Of The Pivotal FOMC
Decision

2. Points To Be Discussed Today:
• Gold Remains Under Pressure Below
$1,800
• Gold Remains On The Back Foot
• Gold (XAU/USD) Pares Intraday Losses
• Gold Technical Analysis
• Gold Fundamental Overview

3. Gold Remains Under Pressure Below
$1,800
• pen interest in gold futures markets shrank by
around 1.5K contracts on Tuesday, partially
reversing the previous build considering
preliminary figures from CME Group.
• Volume followed suit and dropped for the
second session in a row, now by around 6.3K
contracts.

4. Gold Remains Under Pressure Below
$1,800 - I
• Gold extended the pessimism in the first half
of the week.
• Tuesday’s downtick was in tandem with
shrinking open interest and volume, leaving
the prospect for a deeper pullback somewhat
curtailed in the very near term.
• In the meantime, the $1,800 mark per ounce
troy remain as the key resistance for bulls’
aspirations.

5. Gold Remains Under Pressure Below
$1,800 - II

6. Gold Remains On The Back Foot
• Gold remains on the back foot, extends previous
day’s losses.
• Options market turns most bearish in three
months as market braces for Fed tapering.
• Gold needs a dovish surprise to overcome key
hurdle.
• Gold remained depressed through the first half of
the European session and was last seen hovering
near the lower boundary of its weekly trading
range, just above the $1,780 level.

7. US Central Bank
• This marked the second successive day of a
negative move and was sponsored by
expectations for an early policy tightening by
the Fed, which tends to undermine the non-
yielding yellow metal.
• The US central bank will announce its policy
decision later during the US session and is
expected to begin tapering its $120 billion-a-
month asset purchase program.

8. Monetary Policy Statement
• Meanwhile, the markets have been pricing in
the prospects for a potential interest rate hike
in 2022 amid fears about a faster-than-
expected rise in inflationary pressures.
• Hence, the key focus will be on the
accompanying monetary policy statement and
Fed Chair Jerome Powell's comments at the
post-meeting press conference.

9. The US Central Bank
• Investors will look for clues about the likely timing
when the US central bank will raise interest rates,
which, in turn, should play a key role in
determining the near-term trajectory for gold
prices.
• Heading into the key central bank event risk,
traders on Wednesday might take cues from the
US macro data – the ADP report on private-sector
employment and ISM Services PMI.

10. Market Mood Extended
• In the meantime, the cautious market mood
extended some support to the safe-haven
precious metal.
• This, along with a subdued US dollar price
action, acted as a tailwind for dollar-
denominated commodities and helped limit
any further losses for gold, at least for now.

11. Gold (XAU/USD) Pares Intraday Losses
• Gold (XAU/USD) pares intraday losses around
$1,782, following a downside break to the key
support during early Wednesday.
• In doing so, the yellow metal justifies the
bearish Risk Reversals (RR) to drop for the
second consecutive day ahead of the all-
important US Federal Reserve (Fed) meeting.

12. Market’s Indecision Ahead
• Market’s indecision ahead of the Fed’s verdict
could be linked to the mixed headlines over
US stimulus and inflation expectations, not to
forget fresh fears of the COVID-19 third wave.
• Although US President Joe Biden keeps teasing
a deal on the much-awaited $1.75 trillion aid
package this week, Senator Joe Manchin
conveyed a less likely announcement before
Thanksgiving, per CNN.

13. US Inflation Expectations
• Elsewhere, US inflation expectations, as
measured by the 10-year breakeven inflation rate
per the St. Louis Federal Reserve (FRED) data,
snapped a four-day downtrend to bounce off the
lowest levels since October 12 by the end of
Tuesday’s North American trading.
• It’s worth noting that the recent jump in the
covid numbers in China, New Zealand and the UK
challenges market sentiment with Bloomberg
terming Beijing’s latest covid outbreak as the
widespread since the Wuhan incident.

14. The Gold Traders Before Crucial
Market Events
• On a different page, the one-month risk
reversal of gold, a measure of the spread
between call and put prices, dropped the
most since early August to -0.725, per the
latest Reuters data.
• The same hints at the escalating bearish bias
among the gold traders before crucial market
events, namely the Fed.

15. The Gold Traders
• In addition to the Fed, the US ADP
Employment Change, ISM Services PMI and
Factory Orders will also entertain the gold
traders.
• However, major attention will be on how
much tapering the US central bank manages
to agree upon considering the fresh covid
fears and reflation woes.

16. Gold Technical Analysis
• Gold defies a three-week-old ascending trend
channel, also slipped below 100-DMA, while
printing $1,781 as a quote amid receding
bullish bias of the MACD and descending RSI
line.
• Given the rejection of the bullish chart
pattern, backed by bearish oscillators, gold
prices are likely to decline towards an early
October’s swing high near $1,770.

17. Gold Technical Analysis - I
• Following that, a horizontal area comprising
multiple levels marked since September 16, near
$1,745, holds the gate for the bullion’s further
weakness target’s September’s low near $1,721.
• On the flip side, a corrective pullback beyond
$1,785 support confluence, now resistance, could
trigger the run-up to a $1,810 level comprising a
two-month-long descending trend line and a
horizontal line from late August.

18. Gold Technical Analysis - II
• In a case where the gold buyers manage to
conquer the $1,810 hurdle, the upper line of
the short-term bullish channel near $1,824
becomes crucial for the run-up to the “double
top” marked in July and September around
$1,834.
• To sum up, a clear downside break of a short-
term rising channel lures gold bears ahead of
the Fed’s verdict.

19. Gold Fundamental Overview
• Gold remained depressed through the first half of the
European session and was last seen hovering near the
lower boundary of its weekly trading range, just above
the $1,780 level.
• This marked the second successive day of a negative
move and was sponsored by expectations for an early
policy tightening by the Fed, which tends to undermine
the non-yielding yellow metal.
• The US central bank will announce its policy decision
later during the US session and is expected to begin
tapering its $120 billion-a-month asset purchase
program.

20. Gold Hangs Near Weekly Lows
Ahead Of The Pivotal FOMC
Decision

21. Thanks for listening
Gold Hangs Near Weekly Lows
Ahead Of The Pivotal FOMC Decision