Spot gold edges lower as investors wait for next week’s U.S. Fed monetary policy announcement

January 19, 2022 - 4 months ago
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The precious yellow metal price action settled lower on Tuesday, as the US Dollar Index, also known as US DXY, which measures the greenback’s strength against a basket of six major peers, jumped +0.62% to 95.70.

With much talk of rate hikes, it is assessed the U.S. dollar index will continue to impact the spot gold price until the U.S. Federal Reserve monetary policy meeting next week.

Investors are now pricing in a better than 86% probability that the U.S. Fed will raise short-term rates at its meeting of policymakers in March.

Based on the technical aspect, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator holds to a negative bias, while the Moving Average Convergence Divergence (MACD) supports a weak positive signal.

As the price action wobbles above the $1,800-03 support zone, a decisive break would expose the two key levels at $1,788 and the broad base (support) at $1,757-64. Reassess from there.

Viewing the topside, a bull trap could be looming after recently seeing renewed hesitation towards the $1,828-33 level, with $1,840-42 seen as a broader term cap.

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