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Gold seeking a break of the 50% Fibo on dollar weakness

  • Gold futures settled higher on dollar weakness but came of the highs in late North America as the dollar firmed. 
  • Markets are getting set for the FOMC outcome that started its two-day meeting on Tuesday

Spot gold has been better bid since bottoming in the European session, attracting a bid from $1,245.21 to $1,250.55 the high for the day so far. The precious metal did find sellers there in New York trade to a low of $1,246 with US stocks taking fall towards the close, gold has attracted the safe haven bid again for a recent high of $1,250. 

Markets are getting set for the FOMC outcome that started its two-day meeting on Tuesday. The greenback has fluctuated in a wide range around the 97 handle depending on sentiment for the Fed and the condition of risk appetite, but the general consensus is that the Fed will be making policy even more data dependent. 

  • Riksbank Preview: Rates going up in December? - ING
  • FOMC: Policy likely to be even more data dependent - TDS

Much will depend on whether we will see a decline in the 2019 median dot to two hikes from three. The Fed is expected to raise the target range for Fed funds to 2.25%-2.50%. For Tuesday, the DXY was down around the gold settlement but managed to attract a bid again to the 97 handle which was an initial weight on gold. Gold for February delivery on Comex climbed a touch by $1.80, or 0.1%, to settle at $1,253.60 an ounce—the highest finish since July 10. 

Gold levels

  • Support levels: 1238 1231 1226 
  • Resistance levels: 1250 1255 1263 

On the test of R1 at 1250, gold bulls look to the 1262 level which is the 50% Fibo level with the confluence of the 200-D SMA that is found nearby at 1254. However, technical indicators are running out of steam at this juncture on the 4hr time frames at least where there is a slight bearish divergence on MACD. The daily outlook is a touch more positive and weekly is certainly bullish. On the flipside, the 21-D SMA is located at 1233 and a break there will open risk to 1211 late Nov lows just below the 100-D SMA at 1213 ahead of the 1210 round number.


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