Gold prices rose for a third straight day ahead of the Federal Reserve's policy decision. Traders are watching for clues about the Fed's plans to taper its asset purchase program. The document discusses factors influencing gold prices such as the debt crisis at Chinese property giant Evergrande and the Canadian election results. Technical analysis suggests gold needs to close above $1778 resistance for the recovery to extend to $1800.

1. Gold Prices Gain Ahead Of Critical
Fed Policy Decision – What’s Next?

2. Points To Be Discussed Today:
• Gold Prices Climbed For A Third Straight
Session
• Trudeau Holds On, Gold Steadies
• Gold/SPX Daily
• Gold Technical Analysis
• Gold Fundamental Overview
• XAU/USD To Enjoy A Deeper Recovery On A
Break Above $1834
• Gold Price & XAUUSD Chart

3. Gold Prices Climbed For A Third
Straight Session
• Gold prices climbed for a third straight session
on Wednesday, as uncertainty continues to
swirl around a possible collapse of China’s
largest property developer Evergrande Group.
• Evergrande is at risk of defaulting on its $300
billion debt, which has unsettled global
financial markets fearing a "Lehman moment"
that sparked the 2008-2009 global financial
crisis.

4. Evergrande's Debt Crisis Continues To
Unfold
• As Evergrande's debt crisis continues to unfold –
another major market moving event that traders
will be closely watching this week is the outcome
of the U.S Federal Reserve's two-day policy
meeting, which concludes on Wednesday.
• Traders will be scrutinizing the Fed's every
comment for clues into the anticipated wind
down of its $120 billion per month quantitative
program – especially in light of recent mixed
economic data accompanied by rapidly surging
global inflation.

5. Fed Is In A Tough Position
• There's no doubt that the Fed is in a tough
position.
• On the one hand, higher inflation calls for the
tapering of its massive quantitative easing
program.
• However, on the other hand, the weaker than
expected unemployment rate and brewing debt
crisis in China could force the Fed to delay its
plans in order to avoid a meltdown in the
markets.

6. Trudeau Holds On, Gold Steadies
• Canadian Prime Minister Justin Trudeau called an
early election in the hope of securing a majority
government, but voters didn't give it to him and
instead sent back nearly an identical parliament.
• The Canadian dollar clawed back ground after the
results but the main market driver remains:
China.
• CHF and CAD are the strongest of the day, with
AUD and NZD at the bottom. Fed and PBOC
speculation will intensify as we count down to
the decisions.

7. Trudeau Holds On, Gold Steadies - I
• Gold is posting its 3rd daily gain, the
longest uninterrupted run in over 4
weeks.
• Indices are most likely to retest
Monday's lows in the next 36 hrs,
especially if the Evergrande situation
remains unsolved and FOMC statement
clears further path towards the taper.

8. Gold/SPX Daily

9. Trudeau Holds On, Gold Steadies - II
• Trudeau will remain Prime Minister with a
third term but won't have a strengthened
mandate.
• Still, he will have some latitude to reshape the
post-pandemic era.
• Any major pushes towards tax or capital gains
reforms remain opaque, but the left-wing NDP
said taxing the wealthy more heavily is their
top priority if Liberals want their support.

10. Gold Technical Analysis
• Gold price is challenging key 50-Simple
Moving Average (SMA) resistance at $1778 on
its recovery journey.
• A four-hourly candlestick closing above the
latter is critical to extending the recovery
towards the $1800 mark.
• Ahead of that psychological barrier, the
horizontal 200-SMA at $1787 could test the
bearish commitments.

11. Gold Technical Analysis
• The Relative Strength Index (RSI) has turned
flat but holds comfortably above the midline,
keeping the upside potential intact.
• On the flip side, strong support is seen at the
bullish 21-SMA at $1763, which if broken
could trigger a fresh sell-off towards the six-
week troughs of $1742.
• The $1750 psychological level could offer
brief relief to gold bulls.

12. Gold Fundamental Overview
• Gold traded with a mild positive bias through
the early European session and was last seen
hovering near around the $1,778 region, just
below weekly tops touched in the previous
day.
• A subdued US dollar price action seemed to
be the only factor that extended some
support to the dollar-denominated
commodity.

13. Gold Fundamental Overview - I
• That said, the risk-on impulse in the markets
acted as a headwind for traditional safe-haven
assets and failed to assist the XAU/USD to
make it through the 200-hour SMA barrier.
• The global risk sentiment got a strong lift after
struggling property giant China Evergrande
said it would pay some bond interest due on
Thursday.

14. Gold Fundamental Overview - II
• Apart from this, expectations for an
imminent Fed taper announcement further
collaborated to keep a lid on any meaningful
gains for the non-yielding yellow metal.
• Hence, the market focus will remain on the
outcome of a two-day FOMC policy meeting on
Wednesday.
• Investors will look for clues about the likely timing
of when the Fed would being rolling back its
massive pandemic-era stimulus.

15. Gold Fundamental Overview - III
• This, along with the latest economic
projections and the so-called dot plot, will
play a key role in influencing the near-term
USD price dynamics and provide a fresh
directional impetus to gold.
• This makes it prudent to wait for some follow-
through buying before confirming that the
recent pullback from the $1,832-34 region has
run its course and placing fresh bullish bets.

16. Gold Fundamental Overview - IV

17. XAU/USD To Enjoy A Deeper Recovery
On A Break Above $1834
• “Gold extends its consolidation beneath the July
and August highs at $1832/34.
• Although downward pressure is seen increasing,
only below $1691/71 would mark a major top for
an important change of trend lower, with support
then seen at $1620/15 initially, before $1565/60.”
• “Only a break above $1834 would be seen to
complete an in-range base to clear the way for a
deeper recovery to $1860, then $1917.”
•

18. Gold Price

19. XAUUSD Chart

20. Gold Prices Gain Ahead Of Critical
Fed Policy Decision – What’s Next?

21. THANKS FOR LISTENING
Gold Prices Gain Ahead Of Critical
Fed Policy Decision – What’s Next?