Gold investors seem to take it easy after the vigorous move of the past few sessions. The yellow metal is still under selling pressure after the spike in prices over the conclusion of the Fed’s meeting.
Gold price opened the first trading session for the day, September 24th at $1,322.05 per ounce, touching a high of $1,329.30 during the Asian trading hours before continuing the slide towards the $1,310 area.
On the short term analysis of the daily chart, gold price was below the fast 5-day EMA $1,317.32 (Orange) and the slower 35-day EMA (Blue) at $1,325.74. The Moving Average indicator movement shows gold price is forming a downtrend, as prices were lower than both short-term trend-following indicators. However, it’s expected to see some consolidation for some time before an outbreak upwards or downwards.
The MACD (20,60,18) indicator turned negative and last seen at the -4.084. The down-trend is gaining momentum slowly, as the indicator shows, unless another unexpected event takes place. The 14-day RSI indicator is at 40.6552, which might be considered as a neutral signal on the daily gold price chart. The RSI resistance, the previous peak, is at the 56 mark, while the RSI support, the previous bottom, at 33.8324.
The market focus right now is still on the Fed’s next move. The FOMC decision to continue financial stimulus was an unexpected call that sent the price of gold to over $1,360 per ounce. However, Friday’s hawkish comment sent erased these gains. The market still wonders whether the Feds are going to tapper or not? And when will they start tapering? Either way, gold bulls might benefit from the ultra-easy monetary policy or the chaos in case of wrong-timed tapering. The U.S. economy didn’t show signs of full-recovery yet; they are on the right track so far, but the results are slow. The QE have been going for 5 years now, which make it hard to tell if the economic growth is sustainable or not. Moreover, the next Fed chairman is a significant factor that would affect the U.S. economic policy, therefore gold price.
The gold market is still under the pressure of U.S. economic data, fiscal and monetary policies. The FOMC meetings, right now, affect gold price more than traditional supply and demand. Both, the supply side and the demand are weaker than usual. Gold miner companies retreats to higher-grade ores and lay off employees in an attempt to reduce costs, while the demand from Asia, the largest gold consumers, is not as strong as expected. Overall, a considerable volume of the demand is price oriented as many turned into small investors, and not the regular gold consumers. Therefore, it appears that the Fed and FOMC news will be a main drive for gold price movements a while longer.