Gold rallied on Tuesday increasing the price of yellow metal to more than $1140 an ounce in a low-volume trading day. The precious metal is holding range for last few days because of vacation season. The technical bias remains extremely bearish because of a lower low in the ongoing downside wave.

Technical Analysis

As of this writing, the precious metal is being traded around $1143 an ounce. A support may be seen near $1122-$1100, the confluence of a short term horizontal support as well as psychological number as demonstrated in the given below daily chart. A break and daily closing below the $1100 support zone shall incite renewed selling interest validating a move towards the $1070 support area.

On the upside, the precious metal is likely to face a hurdle around $1145, a major horizontal support turned resistance ahead of $1200, the psychological number and then $1241, the horizontal resistance area. The technical bias shall remain bearish as long as the $1337 resistance is intact.

Fed Rate Hike

The U.S. Federal Reserve raised interest rates by a quarter point earlier this month and signaled a faster pace of increases in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation. The rate increase, regarded as a virtual certainty by financial markets in the wake of a string of generally strong economic reports, raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent. Bond yields and the dollar rose after the rate decision while stocks were mixed with financials and tech the only two sectors to show gains.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal around current levels appears to be a good strategy.