Gold Remains in Hot Zone, Market Prepares for FOMC Meeting and Potential Short Correction
Global gold prices remained in a high zone in today's trading, after a fairly aggressive rally in recent weeks. Spot gold traded within the psychologically important area of around US$4,200 per troy ounce, not far from the six-week peak touched earlier this week. Although the broad trend remains upward, intraday movement is beginning to show signs of exhaustion, as profit-taking increases from market participants who have ridden the rally from lower levels.
Fundamentally, gold's current performance is still supported by strong expectations for a Federal Reserve interest rate cut in the coming months. A number of slowing US economic data reinforces the view that the US central bank is approaching a phase of monetary policy easing. Expectations of lower interest rates going forward are driving down real bond yields, thus maintaining gold's appeal as a non-coupon hedge, but is seen as a store of value amid economic uncertainty.
At the same time, market players are beginning to reduce positions ahead of a series of important economic data releases, including the employment report, the services activity index, and key inflation indicators, which the Fed frequently references. This data has the potential to alter market perceptions regarding the pace and magnitude of interest rate cuts. If the data comes out stronger than expected, the US dollar and bond yields could strengthen in the short term, potentially putting downward pressure on gold prices. Conversely, data supporting the economic slowdown narrative will likely fuel the precious metal's bullish trend.
From a technical perspective, gold's medium-term trend remains bullish. Trend indicators, such as daily moving averages, are generally trending upward, confirming buyer dominance in recent months. However, momentum indicators such as stochastics and other oscillators are beginning to enter overbought territory, signaling the potential for a short-term consolidation phase or technical correction. This condition indicates a market that remains positive, but no longer in the extreme euphoria of previous sessions.
Several analysts have highlighted the area around US$4,200 as psychological support and an initial resistance zone for gold's uptrend. As long as the price can stay above this range, the bullish structure is considered intact. Below, the US$4,160–US$4,170 area is seen as further support, a crucial boundary before the market considers a deeper correction scenario. On the other hand, the US$4,230–US$4,250 area represents a fairly strong resistance zone. A convincing breakout above this range has the potential to open up space for a test of higher levels and the opportunity to set a new record.
In the short term, gold's movement is likely to be dominated by a consolidation pattern between these support and resistance zones, while awaiting clarity on the Fed's policy direction at the next FOMC meeting. For market participants, the current phase demands increased caution given the price's already high position and heightened sensitivity to every economic data release and statement from central bank officials. Risk management and discipline in trading plans are key amidst the still volatile market dynamics.
Source: Newsmaker.id
