Gold Traders Await Fed’s Move While Momentum Shows Exhaustion Ahead

  • Commodities Analysis

Analyzing the movements in gold futures contract, I find that despite a surge in bullish outlook till last week as the expectations were tilting towards a breakout above $2000, persisting exhaustion kept gold futures below $1,950.

No doubt, recessionary fear seems to be on hold as Europe has tried a lot to avoid this during the fourth quarter of last year despite a steep surge in oil and gas prices, with supportive economic growth during this quarter.

Gold futures slid after hitting a peak on Mar. 3, 2022, at $2,079 and tested the year’s low at $1,618.60 on Nov. 3, 2022.

After forming a base at $1,622, a level tested three times on Sept. 28, Oct. 21, and Nov. 3, the gold futures started an uptrend as the recessionary fear started to surge.

Undoubtedly, gold futures are facing stiff resistance since Jan. 16, 2023, above $1,932, as economic data during the first quarter of this year looks evident enough to skip recessionary fear as most of the major corporates have controlled their expenditure to keep profit margins intact.

Despite a sudden surge in volatility in gold prices this week, the Federal Reserve could raise rates by 25 basis points from 4.50 to 4.75 and raise expectations for a slow pace of tightening in upcoming meetings of the Fed.
Gold Futures Weekly Chart

Technically speaking, in the weekly chart, despite a steep reversal from the weekly low at $1,900, the weekly candle is still below the immediate resistance at $1,956.

If gold futures do not hold above this immediate resistance after the Fed’s interest rates decision, a sell-off could trigger, which could remain till this week's closing.
Gold Futures Daily Chart

In the daily chart, despite the formation of a small bullish dozy, which is still below the immediate resistance at $1,950, it looks evident that there could be a surge in selling pressure as soon the Fed opens its cards tonight.
Gold Futures 15 Minutes Chart

In the 15-minute chart, gold futures could see wild price swings after the announcements of interest rate decisions if there is any change in the pace of hikes during the upcoming meetings of the Federal Reserve.

I conclude that gold futures could see sharp exhaustion if it doesn't find a breakout above $1,956.

Disclaimer: The author of this analysis does not have any position in Gold futures. Readers are advised to take any position at their own risk.

{{yt-w-p1urPnE0Y|Gold - Outlook from January 30 to February 28, 2023}}

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