Gold Price Outlook – Gold Jumps Ahead of FOMC on Wednesday

Gold Technical Analysis

Gold markets initially gapped lower, only to turn around and show signs of life again as we have broken above the $4,000 level. That being said, it will be interesting to see how this plays out because we do have the FOMC interest rate decision on Wednesday, and that will have a major influence on what happens next. I do think that you have to look at gold through the prism of a market that is bouncing after a dangerous sell-off. The question is, does that sell-off mean that the trend is over? We’re not quite there yet. Basically, we have a big swing high and a big swing low, and now the question is: the next high, will it be lower than the one before it? I think there’s a good probability of that, but we’ll just have to wait and see.

Jerome Will Set the Tone

A lot of this comes down to whether or not the Federal Reserve seems hawkish or dovish. Right now, it certainly looks like we are going to hang on to whatever the chairman of the Federal Reserve has to say during that press conference. If we were to break down below the 50-day EMA, then the market would probably drop down to the $3,600 level and then possibly even $3,500. Again, we’ll just have to wait and see. Clearing the $4,200 level would obviously be a very strong sign.

I do think that we’re in the tail end of the massive move to the upside. So, although it’s really difficult to short this market, at least here, I think this is a scenario where you probably are going to have to be very nimble.

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