Gold Price Outlook – Gold Continues to Grind Sideways Ahead of FOMC

Gold Technical Analysis

The gold market has gone back and forth during the course of trading in early Wednesday hours, but we are waiting on the FOMC. So, it’s probably not a huge surprise to think that we’re just killing time. The $4,200 level, of course, is an area that a lot of people will be watching to see whether or not it will hold.

FOMC Expectations and Market Reaction

The FOMC interest rate decision is expected to be a 25 basis point cut, but that doesn’t necessarily, to me at least, steal the headlines. What people are going to be paying attention to, in my estimation, is going to be the statement and, perhaps more importantly, the press conference afterwards, as it’ll give us a bit of a heads up as to what the Federal Reserve might be going forward. If they seem ultra dovish, then it’s likely that gold will be a big beneficiary. Gold should be strong over the next several months anyway, for a whole host of reasons, not the least of which will be the fact that central banks around the world continue to buy it.

But we also have momentum in our favor. There is a world in which gold and the US dollar can rise. So don’t rely too heavily on that correlation. And in fact, that was the correlation earlier this year. So that being said, I like buying dips in the gold market and have no interest whatsoever in shorting it. At least not until we break down below $3,950, which we are nowhere near at the moment.

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