Gold Price Analysis – Gold Holds Above $4,000 Floor Ahead of Fed Decision

Gold Technical Analysis

The gold market gapped lower to show signs of negativity at the open on Wednesday as we sit just above the crucial $4,000 level. The $4,000 level, of course, is a large, round, psychologically significant figure and so far has shown a proclivity to be supported all the way down to the $3,900 level. This has been tested a few times recently.

The upside is capped at least in the short term from what we’ve seen near the $4,200 level, and the 50-day EMA racing towards that level also has an influence as well. Keep in mind that the Federal Reserve has an interest rate decision later in the day, and as that influences the bond market, it will certainly influence the gold market in tandem. Higher yields typically work against the value of gold, and that certainly has been the case from time to time here recently.

Federal Reserve Decision and $4,000 Floor Hold Gold’s Focus

I think ultimately this is a market that will be waiting around and trying to figure out where the next momentum comes into the picture. The Federal Reserve interest rate decision will more likely than not cause volatility, as the FedWatch tool suggests a 40% chance of a hike. In other words, at least 40% of the market will be disappointed or shocked.

With that, I would anticipate that things will get a little noisy later in the day. Whether or not that truly changes everything remains to be seen, but as things stand right now, we are at the bottom of a consolidation area, and that in and of itself could cause a little bit of noise.

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