Investors Remain Cautious Ahead Of Fed's Decision

Andreas Thalassinos
Andreas Thalassinos

12.6.2024

Gold has bounced back above the key level of 2314.75 after the sharp decline on June 7, ahead of the Fed's decision later today. Despite remaining on a downward trajectory, investors are in a wait-and-see state as they look for a clear direction from the Federal Reserve. Traders will closely monitor the precious metal today due to significant economic data releases and their potential impact on Gold and currency valuations.

Overview

Gold has bounced back above the key level of 2314.75 after the sharp decline on June 7, ahead of the Fed's decision later today. Despite remaining on a downward trajectory, investors are in a wait-and-see state as they look for a clear direction from the Federal Reserve. Traders will closely monitor the precious metal today due to significant economic data releases and their potential impact on Gold and currency valuations.

High Impact Economic Events

Wednesday 06:00 am (GMT+0): GDP m/m (GBP)

Wednesday 12:30 pm (GMT+0): Core CPI m/m (USD)

Wednesday 12:30 pm (GMT+0): CPI m/m(USD)

Wednesday 12:30 pm (GMT+0): CPI y/y (USD)

Wednesday 06:00 pm (GMT+0): Federal Funds Rate (USD)

Wednesday 06:00 pm (GMT+0): FOMC Economic Projections (USD)

Wednesday 06:00 pm (GMT+0): FOMC Statement (USD)

Wednesday 06:30 pm (GMT+0): FOMC Press Conference (USD)

Thursday 01:30 am (GMT+0): FOMC Press Conference (AUD)

Thursday 01:30 am (GMT+0): FOMC Unemployment Rate (AUD)

Thursday 12:30 pm (GMT+0): Core PPI m/m (USD)

Thursday 12:30 pm (GMT+0): PPI m/m (USD)

Thursday 12:30 pm (GMT+0): Unemployment Claim (USD)

Friday Tentative: BOJ Policy Rate (JPY)

Friday Tentative: Monetary Policy Statement(JPY)

Friday 02:00 pm (GMT+0): Prelim UoM Consumer Sentiment (USD)

Technical Analysis

Gold has been in a state of wait-and-see after sharply declining on June 7 and ahead of the Fed's decision later today. The precious metal has been in a downtrend since June 7 when the price formed a bearish reversal, known as a failure swing in technical analysis. Specifically, the peak formed at 2387.69 was lower than the previous peak of 2450.06, and subsequently, prices fell below the trough of 2314.75. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator support the bearish outlook. In particular, prices are below the 50-period EMA, and the Momentum oscillator registers values below the 100 baseline.

Potential Upside Targets

If the bulls manage to take control of the Gold market, traders may consider the following three potential upside targets:

2387.69: The initial upside target is 2387.69, aligning with the lower peak of the failure swing.

2450.06: The second price objective is 2450.06, representing the all-time high reached on May 20.

2524.42: The third upside target is 2524.42, corresponding to the R2 resistance level calculated using the monthly Pivot Point methodology.

Potential Downside Targets

If the bears manage to keep control of the market, traders may find potential opportunities in the following three downside targets:

2277.24: The initial support level is 2277.24, corresponding to the daily low marked on May 3.

2216.85: The second price objective is 2216.85, aligning with the 50 percent Fibonacci Retracement drawn from the trough at 1984.16 to the peak at 2450.06.

2163.23: The third potential downside target is estimated at 2163.23, representing the 61.8 percent Fibonacci Retracement drawn from the trough at 1984.16 to the peak at 2450.06.

Conclusion

Investors remain cautious as they await guidance from the Federal Reserve regarding the downward trend of Gold. They are particularly focused on the FOMC interest rate decision, especially after recent rate cuts by the European Central Bank and the Bank of Canada. Furthermore, the upcoming release of key economic indicators such as CPI and PPI will provide insights into the US Dollar and Gold, respectively. Traders will be paying close attention to the precious metal today due to the release of important economic data and its potential effects on Gold and currency pairs.

 

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Andreas Thalassinos
Andreas Thalassinos

Andreas Thalassinos is a recognized authority in the financial markets and world renowned for his expertise in algorithmic trading. He is a Certified Technical Analyst and highly respected lecturer in the education of traders, investors, and financial markets professionals. Thalassinos has played a key role in the development of education within the industry, training tens of thousands of traders of all skill levels. Traders value his seminars and workshops for the rich content, his passionate, charismatic, and lively presentations.