The price of gold (XAU/USD) remains in a bullish position above $1,500 despite Wednesday’s FOMC Metting statement, which contrary to expectations did no harm to the price of the yellow metal.
Traders were expecting the Federal Reserve committee’s market-opening statement to sway the market out of the safe haven, gold, and into the stock market. However, it looks like investors still remain cautious going into Thursday.
The price of gold (XAU/USD) continues to trade in a bullish trend despite the current short-term consolidative pattern formation around the $1,500 level.
XAU/USD (Gold) Fundamentals Overview
From a fundamental perspective, the price of gold is trading at the back of a very quiet week, which tentatively works in its favor. Unlike in the previous week, when the US released positive CPI and Retails Sales data, this week has been relatively underwhelming, which explains why there has been little movement in the price of the yellow metal.
On Wednesday, the Federal Reserve reaffirmed that the recent rate cut was not meant to set the path clear for a stimulus program, but rather, a mare recalibration that had been long overdue. Meanwhile, President Trump continues to push on for a bigger rate cut, which could see the price of gold soar even higher.
The trade war with China is also taking its toll on the US economy and this will add more impetus to the attractiveness of gold investments. On Monday, the 3-month and the 6-month bill auction rates fell further to 1.90% and 1.84% from 1.96% and 1.89% respectively, further putting a strain on capital investments.
XAU/USD (Gold) Technical Analysis (the 60-min Chart)
Technically, the price of gold appears to be stuck in a sideways movement, which comes at the back of a major bullish run at the start of the month. The XAU/USD (gold) rallied to top $1,530 in the middle of this month but has since pulled back slightly to hold tight just above the $1,500 level.
This creates some interesting trading opportunities for both the bulls and the bears. The bulls will be targeting short-term profits at around $1,509, $1,518 and $1,527 while the bears will look to pounce at around $1,498 and $1,489. The Relative Strength Index indicator shows that the current sideways movement could continue through Friday.
XAU/USD (Gold) Technical Analysis (the Daily Chart)
In the daily chart, the price of gold appears to be trading in a sharply ascending wedge with a hint of short-term consolidation right at the end. This could be a short-term rest created by the bulls taking some profits off their current long positions.
Therefore, it would be ideal to expect a continuation of the bullish run thereafter, especially given the weakness in economic fundamentals. As such, the bulls will be targeting long-term profits at around $1,533 while the bears will be looking at $1,468 and $1,438.
In summary, the price of gold (XAU/USD) appears to be experiencing short-term consolidation but when you look at the bigger picture, the bulls remain firmly in control going into the final third of the month.