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Jan 27, 2021, 5:42 PM GMT

Gold Traders Eye FOMC Meeting for(ward) Guidance

The price of gold has been consolidating within a narrow range around the psychologically significant support level at the 38.2 per cent Fibonacci retracement since the expectations of our last analysis of the commodity were fulfilled. The reason for the temporary pause in the development of the recent downtrend is the FOMC meeting, which is scheduled to take place later today.

The overall trading activity diminished over the last several hours as gold traders are anticipating to see the outcome of the meeting, which could very likely affect the demand for safe-haven assets in the foreseeable future. Additional FED interventions into the underlying monetary policy would probably drive U.S. yields even lower, which would consequently have an adverse impact on the value of the dollar. This would also indirectly boost the price of gold due to the inverse relationship between the two.

Conversely, if the Federal Reserve abstains from altering its forward guidance later today, which is what we anticipate, its underlying QE programs would remain unchanged. This would be welcoming news for market bears eyeing the probable continuation of the downtrend's further development. These expectations are primarily substantiated by the fact that U.S. price stability has been improving steadily over the recent term, which is likely to be interpreted as a positive sign of recovery by the FED.

Profit & Loss
Short Term Long Term Net % Gains
+ - + -
36.00 USD 0 55.55 USD 18.94 USD
Short Term
+ -
36.00 USD 0
Long Term
+ -
55.55 USD 18.94 USD
Net % Gains

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