Two catalysts are pinning gold near weekly lows: today’s FOMC decision and a renewed escalation on the US-Iran front. The Fed is expected to leave rates at 3.50%–3.75%, and consensus looks for up to two dissenters voting in favour of a hike. More dissenters than that would be the hawkish surprise; a vote with none at all would be the dovish one.
Gold is trading near weekly lows as hedging activity into the FOMC decision and renewed escalation on the US-Iran front weigh on the precious metal. According to InvestingLive, Iran launched a “surprise attack” against US forces in the region tonight. All the missiles and drones were intercepted, but the escalation increased the risk of a prolonged conflict.
The decision hinges on the dissenters
All eyes turn to the FOMC decision later today. The Fed is expected to keep interest rates unchanged at 3.50%–3.75%, while consensus expects up to two dissenters to vote in favour of an interest rate hike at this meeting, likely Fed’s Logan and/or Fed’s Hammack. Traders get no Summary of Economic Projections here, and forward guidance is likely to remain limited, with Fed Chair Warsh expected to refrain from providing major policy signals while stressing data dependence and the Fed’s commitment to price stability.
More than two dissenters, or a hike delivered already at this meeting, count as the hawkish surprise — and gold could drop into new monthly lows on tightening financial conditions if that lands. A perfect consensus with no dissenters is the dovish case, which would likely trigger a relief rally with traders starting to position for a possible stagflationary scenario. Beyond today, tomorrow brings the US PCE price index, the Advance Q2 GDP and the Jobless Claims figures, with the US Q2 Employment Cost Index on Friday.
Gold stays rangebound below 4,200 resistance
On the charts, gold keeps hovering around the major downward trendline and price action has been mostly rangebound since late June. Buyers need a break above the 4,200 resistance to gain more conviction for a trend reversal, while sellers will likely step in around that level to position for a drop into 3,885. A break higher instead opens the next trendline around the 4,500 level.
A decades-old resistance line broke and still holds
Gold spent decades trading below a resistance trendline that originated in the late 1970s, and that resistance has now been decisively broken, with price so far continuing to trade above that structural level. An editor’s note appended to the analysis puts the weight of evidence at 74/100 — long-term bullish, short-term corrective. Some technical models identify the $7,000–8,000 region as a potential long-term scenario rather than a forecast, assuming current macroeconomic conditions remain broadly supportive over several years.
Sources: InvestingLive, Investing.com
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