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Gold: the market is waiting for the FOMC

On Tuesday, the yellow metal finished trading with a moderate growth, but in the second half of the day the asset was under significant pressure from the dollar and the dynamics of the main stock indexes.

A significant increase in the indices was provoked by a new tweet of Donald Trump, in which he reported a very good telephone conversation with PRC leader Xi Jinping. Many traders were inspired by the warming of relations between the two countries and the possibility of concluding a trade agreement, so gold, as a protective asset, temporarily lost its investment appeal.

A restraining factor for investors is the FOMC meeting, the results of which will be announced today. Before the meeting, Donald Trump stepped up his pressure on Fed Chairman Jerome Powell, hinting at his possible resignation, depending on the outcome of the current meeting. Earlier, Bloomberg News reported that White House lawyers are considering the legal grounds for lowering Powell in office, retaining his seat on the board of directors. However, later economic adviser of the president Lawrence Cudlow has denied this information.

Investors expect that the Fed at the current meeting will leave rates unchanged, but may hint at a possible reduction in the next FOMC meetings, which will be a good support for strengthening gold. In addition to the FOMC meeting today, it is worth paying attention to the speech of the ECB President Mario Draghi, since yesterday his speech led to significant fluctuations in the foreign exchange market.

On the chart, despite the local decline, gold continues to move within the upward price channel, while maintaining good opportunities for continued growth, in the direction of the level of 1360.00. But it is worth considering the potential entry points to the market only after the completion of the local corrective movement. The nearest support area is located at the level of 1340.00.

Resistance Levels: 1354.00, 1360.00, 1365.00;

The levels of support: 1340.00, 1332.00, 1321.00.

The main scenario is a correction to 1340.00, possibly 1332.00, and a resumption of the upward movement.

An alternative scenario - growth to 1360.00 from current levels.

Today we recommend to stay out of the market, because the results of the FOMC meeting can cause significant market fluctuations, which are difficult to predict.

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