Gold is resilient ahead of the FOMC policy meeting. It has moved into its bullish channel between the upper blue and red bands (blue arrow). Moreover, its daily RSI has popped above 50 (green rectangle), suggesting a more positive underlying momentum. The question is if the gold price can maintain this positioning. This will depend to a large extent on the tone that of the FOMC statement and Fed chair Powell's press conference.
It is likely that the Federal Reserve holds interest rates steady at the 525-550 target range. However, it is equally likely that the message will be hawkish and similar to that of Jackson Hole – that inflation is still too high.
Last week's headline CPI print came in higher than expected with a major culprit being higher energy prices. The Fed may communicate that it intends to keep rates higher-for-longer as it continues to push for its 2% inflation target.
Of interest will be the dot plot, which previously suggested one more hike for this year.
A hawkish tone is likely to act as a headwind for gold.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.