Gold Price Analysis – Gold Drops Ahead of Fed Decision

Gold Technical Analysis

The gold market has broken below the $5,000 level, a large, round, psychologically significant figure that we have been testing for a while, but now it looks like we are testing the 50-day EMA. The 50-day EMA, of course, is an indicator that a lot of people will be watching and looking for some type of support.

Central Bank Decisions and Support Levels

I think we have a situation where it is probably only a matter of time before we do see buyers, but we have to get through the Federal Reserve on Wednesday, the Bank of Canada, Thursday has the ECB, the Bank of England, the Bank of Japan, and the Swiss. With all that being said, we have a lot of problems right here just waiting to happen.

Longer term, I do think that you have buyers that will try to pick up cheap gold. $4,600 is the floor in this market at the moment and with interest rates in America pricing in the fact that the Federal Reserve has to hold, that has put some pressure on gold. But there are geopolitical issues that think that it should be strong.

A lot of noise, I think you have to assume that we get more of the same going forward and with that being the case, I look at this as a scenario where we have a little bit of a drop and then eventually a bounce, but I would be a little bit patient in trying to buy that bounce. At least get through the Federal Reserve if not a couple of the other major central banks.

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