Gold Drifting Lower Ahead of Fed
Gold prices drifted slightly lower today as many investors are likely awaiting the FOMC announcement to be released Wednesday afternoon. Gold will quite possibly remain range bound until the announcement.
After rallying over $70 per ounce since bouncing off support in the $1183 area, the gold bulls appear to be running out of gas. This rally came as no surprise, however, as market sentiment had seemingly reached a very bearish extreme and a bounce became more and more likely. The question now becomes whether or not the gold bulls can keep the rally going. The gold market is lacking fresh bullish inputs and it is likely that many shorts have already been squeezed out of the market. It would seem that without some type of bullish catalyst that gold may very well head back down to support for another test. This could really make or break the gold market in the near-term as a breach below this support level could potentially see gold prices begin another significant leg lower.
The dollar index continues to hover near four year highs while stocks seem to have regained their footing following recent volatility. Should the stock market continue to move to the upside while the dollar stays strong, gold may have a very difficult time getting any real traction to the upside. While no major changes are expected from this week's FOMC meeting, investors will be looking for guidance on the first rate hike. Should the Fed appear more hawkish in its comments, gold prices may be headed lower again in a hurry.
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28 Oct 2014 | Categories: Gold