2. Points To Be Discussed Today:
• How Far Will Gold Fall?
• Gold’s Immediate Future
• Gold Down As Fed Hints At Faster-than-Expected Interest
Rate Hikes
• Gold Price Prediction – Prices Rebound As Dollar Slips
• Gold Technical Analysis
• Gold Settles Slightly Higher, Extends Gains After Fed Policy
Statement
• Gold Prices Ease As Fed Signals Quicker-than-expected Rate
Hikes
• Hot/Cold Gold Contract
3. How Far Will Gold Fall?
• The FOMC meeting was not kind to gold. With a
taper now almost nailed on this year and rates
potentially rising from next, it seems gold’s
appeal is beginning to wane.
• The yellow metal was already on a downward
trajectory in the weeks leading up to the Fed
meeting, with traders seemingly of the view that
their determination to taper this year would not
be derailed by weakening data and growing risks
to the outlook.
4. Gold’s Immediate Future
• And so turned out to be the case.
• Although as ever, there was plenty of room for
manoeuvre, should the situation warrant it which
means the central bank has given itself a little extra
time.
• As for what this means for gold’s immediate future, it’s
not looking great.
• Of course, should certain situations unfold in a manner
that could derail the taper – Covid, data, debt ceiling
etc – that will change.
• But the Fed is currently assuming it won’t and
therefore, so are the markets.
6. Gold Finds Itself Falling Quite Hard
• After rotating off $1,780 – prior major
support and around the 61.8 fib on the 4-
hour chart – gold finds itself falling quite
hard and this week’s lows around $1,740
now look within reach once more.
• A move below here could see $1,700
back in focus.
7. Gold Finds Itself Falling Quite Hard - I
• One thing worth noting is how much is now
priced in. A taper this year – most likely
announced in November – a rate hike late
next year and no major downside risks
materialising.
• The only thing missing is higher inflation or a
faster recovery through the winter, both of
which could hasten the Fed’s tightening and
accelerate gold’s decline.
8. The Momentum Indicators
• But there is a long list of uncertainties
going into the final months of the year.
And with so much now priced in, just
because the Fed is moving to a tightening
path, it doesn’t mean gold is in freefall.
• The momentum indicators will be
interesting to watch in the coming
weeks.
9. Gold Down As Fed Hints At Faster-
Than-expected Interest Rate Hikes
• Gold was down on Thursday morning in Asia,
with the U.S. Federal Reserve signaling that asset
tapering could begin within 2021 and that
interest rate hikes could come sooner than
expected as well.
• Gold futures fell 0.80% to $1764.65 by 11:48 PM
ET (3:48 AM GMT).
• The dollar, which usually moves inversely to gold,
edged down after earlier gains on Thursday but
remained near a one-month high.
10. Gold Price Prediction – Prices
Rebound As Dollar Slips
• Gold prices bounced for a third consecutive trading
session.
• The selloff in the greenback helped provide tailwinds
for gold prices. U.S. Yields were mixed U.S. Treasury
bonds continued to attract traders.
• U.S. home sales declined in line with expectations.
• According to the National Association of Realtors, sales
of previously owned dropped by 2% in August to an
annualized rate of 5.88 million units.
• Sales were 1.5% lower than August 2020 for the first
annual decline in 14 months.
11. Gold Technical Analysis
• Gold prices rebounded but continue to
form a bear flag pattern.
• This pattern is a continuation event that
pauses before it refreshes lower.
• Prices remained below resistance seen
near the 10-day moving average, at
1,790.
12. Gold Technical Analysis - I
• Target support is seen near the August lows at
1,677.
• The 10-day moving average has crossed below
the 50-day moving average, which means that
a short-term downtrend is now in place.
• Short-term momentum has reversed and
turned positive as the fast stochastic
generated a crossover buy signal.
13. Moving Average Convergence
Divergence
• Medium-term momentum has turned negative as
the MACD (moving average convergence
divergence) index generated a crossover signal.
• This sell signal occurs as the MACD line (the 12-
day moving average minus the 26-day moving
average) crosses above the MACD signal line (the
9-day moving average of the MACD line).
• The MACD histogram is printing in negative
territory with a downward sloping trajectory
which points to lower prices.
15. Gold Settles Slightly Higher, Extends
Gains After Fed Policy Statement
• Gold prices settled with a modest gain on
Wednesday, then moved up further after
Federal Reserve officials signaled that they're
almost ready to taper their bond-buying and
expect to raise interest rates by late 2022.
• December gold GCZ21, -0.78% was at
$1,785.80 an ounce in electronic trading,
following a settlement at $1,778.80, up 60
cents, or 0.03%, for the session.
16. Gold Prices Ease As Fed Signals
Quicker-than-expected Rate Hikes
• Gold prices dipped on Thursday after the
U.S. Federal Reserve signalled easing its
monthly bond purchases by next year
and a sooner-than-expected interest rate
hike.
• Which could increase the opportunity
cost of holding the non-yielding bullion.
18. Gold Flat As Investors Brace For
Evergrande Risks, Fed Policy Decision
• Gold prices were flat on Wednesday
amid rising uncertainties triggered by
China Evergrande's debt crisis.
• And anticipation of policy cues from the
U.S. Federal Reserve on its timeline for
reducing stimulus for the world's largest
economy.
