The Gold Spot Prices (XAUUSD) are trading flat on Wednesday morning after rallying over 1.72% in the previous session as the concerns of a re-emerging banking crisis and signs of softening US economy gripped investor sentiment ahead of the conclusion of the two-day FOMC meeting later today.
Investors are concerned that the signs of weakness in the US job market could indicate a looming broader economic slowdown. A rate hike could exacerbate the effects of the slowdown, pushing the economy closer to a possible recession. The CME FedWatch Tool reports that the cash market is pricing in an 89.3% probability for a 25-basis point rate hike later today, down from the 93.2% a day before.
Technical
The 4H chart shows that the non-yielding is trading within a range higher after the price action found support at the $1973.59/ounce price level. The current sentiment of a potential banking crisis and recession has helped the price action break above the 23.60% Fibonacci retracement level and the $2000/ounce mark as the bulls look to re-take the $2015.95/ounce resistance level. The re-capture of the $2031.98/ounce resistance level would entice the bulls to target the $2015.95/ounce as the next level of significance. However, the bulls would need intensifying fears of a potential recession and dovish comments from the Fed to support a move towards the $2049.20/ounce.
However, for the bearish sentiment, the bears would need to push the price below the 50-day moving average and 23.60% Fibonacci retracement level if they look to retest the $1973.59/ounce support level. However, the precious yellow metal would need economic indicators and a strengthening US dollar to support a breakout towards the $1950.05/ounce support level.
Summary
The market is firmly focused on the Fed’s interest rate decision later today, with the ISM services PMI acting as sort of a curtain-raiser before the main act. However, with the market firmly concerned with a potential recession and fears of a re-emergence of strain on the banking sector, the non-yielding bullion is poised for some increased volatility during the trading session. Nevertheless, a breakthrough on either the $2031.98/ounce resistance level or the $1973.59/ounce support level could determine the direction of the non-yielding bullion in the short term.
Sources: TradingView, Reuters, MT Newswire.
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