This morning, at the start of the Asian session, gold came under strong selling pressure, falling to the 362x area as expectations for a 50-basis-point rate cut dropped to 3% from 10% previously.
However, gold later rebounded to around 3643 USD as the market priced in more than a 96% chance that the Fed will cut rates by 25 basis points this Thursday. This indicates that a Fed rate cut is almost certain, a signal that has provided strong support for gold.
On the other hand, the rebound in inflation serves as a warning for investors, leading the market to believe that the Fed should only cut rates by 25 basis points this month. This is why expectations shifted so quickly over the weekend.
Therefore, gold is likely to trade sideways within the 362x – 365x range as the market maintains a cautious stance ahead of the rate decision.
If there are no surprises, once the decision is announced, gold will likely see sharp volatility and has a high chance of breaking out to new highs in the 369x – 3700 USD/ounce zone.
Technical analysis:
In the short term, gold is expected to move sideways within a wide range of 361x – 365x in an accumulation phase, waiting for a catalyst to break out strongly once signals from the Fed’s rate decision emerge.
Trí Hùng
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