Gold Price Under Pressure Ahead of Decision on US Interest Rates
GOLD PRICE CHART AND ANALYSIS:
- The four-month downtrend in the gold price looks set to continue despite its recent stability.
- Two hikes in US interest rates are expected this year – another reason for traders to shun it.
GOLD PRICE CHART BEARISH
The price of gold remains in a four-month downward-sloping channel on the daily chart, despite having steadied over the past two weeks, and could lose more ground if the US Federal Reserve strikes a hawkish tone today and reinforces predictions of an increase in US interest rates in September.
Expectations of a second rate rise later this year are adding to the attractions of the USDcompared with zero-yielding gold, and a stronger Dollar would likely mean a weaker gold price given the strong inverse price relationship between the currency and the precious metal.
GOLD PRICE CHART, DAILY TIMEFRAME (APRIL 1 – AUGUST 1, 2018)
As the chart above shows, the gold price has traded sideways since its fall on July 17 and a break through the July 19 low at $1,211.52 would bring the $1,200 level into focus, with trendline support just below there at around $1,195. On the flipside, a break above the July 26 high at $1,235.31 on a dovish Fed would dispel some of the current negativity.
Large speculators have not been net-short since 2002.
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