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Gold retreats sharply and hits 2-week lows after Fed

FXStreet (Córdoba) - Gold prices rallied ahead of the event of the day, the US Central Bank decision, with spot gold reaching a daily high of $1,182.90 a troy ounce before retreating sharply. The commodity plummeted down to a fresh 2-week low of $1,152.23 after the Fed left the door open to a December rate hike.

While the Fed decided to stand pat on rates, it kept a 2015 rate hike on the table despite acknowledging the “pace of job gains slowed” and inflation remains below the 2% target. The dollar rose sharply across the board, dragging gold down, as investors were probably expecting a more dovish tone from the Fed following a series of disappointing economic indicators over the last weeks.

Gold technical view

“Technically, the daily chart shows that the price is hovering around the 38.2% retracement of its latest bullish run at 1,158.06 as the price extended below the 200 SMA, while the technical indicators have crossed their mid-lines towards the downside, anticipating some further declines”, said Valeria Bednarik, chief analyst at FXStreet. “In the shorter term, the 4 hours chart the technical bias is also bearish, as the price accelerated below its 20 SMA, whilst the technical indicators head strongly south below their mid-lines. A break below the mentioned daily low should lead to a test of a strong static support region around 1,142.50, while additional declines below this last, should see the commodity resuming the bearish trend previous to the October recovery”.

Support levels: 1,152.20 1,142.50 1,135.50. Resistance levels: 1,161.80 1,170.90 1,179.30.

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