Gold is trading with unrivalled bullish momentum supported by price stability above local demand zone $3675 as pre Fed rally reached $3697, just $3 away from psychological barrier $3700
Markets remain cautious ahead of tomorrow's interest rate decision by Federal Reserve which widely expected to cut rates by 25 BPS as a base case.
Dollar Index has already priced in the impact as the basket of major currencies reaches 97 low.
Fundamental Drivers:
- Tomorrow's Fed rate decision.
- Dollar Index plunges below 97
- Central Banks step up Gold purchases.
- Record ETF inflow of Gold
- Geo political situation remains fragile.
- 10 Year Bond Yields remain elevated, a dip in yields and further weakness in Dollar will boost Gold.
- Markets will closely monitor Fed's commentary for any dovish signals.
Technical Drivers:
.Gold prices maintain strong bullish uptrend supported by price stability above horizontal demand zone $3675.
.RSI on Daily time frame sits at 80 signalling strength in uptrend while 4 hour RSI reading at 74 indicates room for further gains though monthly time frame RSI at 88 is extremely overbought which may cause a substantial price correction ahead after rate cut impact is digested.
Potential Support & Resistance and possible scenario:
Gold is trading on All Time High around $3698 which is very close to psychological mark $3700 as Dollar Index has broken below 97.
Immediate hurdle sits at $3700-$3705 above which next resistance is positioned at $3722 followed by $3735 and $3758 while major bullish extension may target next leg higher at $3780.
As reflected by Daily time frame price action and candle structure, Gold rally has left enough liquidity and profit booking on heights is a high probability which may cause a price correction towards major support levels before resuming next major bullish impulse wave.
Break below immediate support $3675 will expose next support $3663 followed by $3655-$3645 below which 4 hourly 50 EMA sits at $3620.
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