Gold’s Rally Losing Steam Ahead of Key Central Bank Meetings
Gold’s rally appears to be losing steam ahead of key central bank meetings this week. The US Federal Reserve, the European Central Bank, and the Bank of Japan are all set to announce their monetary policy decisions on Wednesday, Thursday, and Friday, respectively.
The Fed is widely expected to raise interest rates by 25 basis points, but the accompanying statement will be closely watched for any hints about the future path of monetary policy. A hawkish statement could weigh on gold, while a dovish statement could provide support.
The ECB is also expected to raise rates by 25 basis points, but there is some uncertainty about whether it will signal another hike in September. A dovish ECB could also support gold prices.
The BoJ is expected to keep its ultra-easy monetary policy in place, but the meeting will be closely watched for any signs of change. A change in policy could have a significant impact on gold prices.
Technically, gold is facing resistance at the early-June high of 1983. A break above this level could signal a continuation of the recent rally. However, a failure to break above this level could lead to a pullback towards the June low of 1893.
Overall, the outlook for gold is uncertain ahead of this week’s central bank meetings. However, the recent rally has been driven by concerns about a global economic slowdown, and these concerns are likely to remain in place, which could support gold prices.
Key Levels to Watch
- Resistance: 1983
- Support: 1945, 1893
Sentiment
- Retail traders: 69% net-long
- IG Client Sentiment: Typically used as a contrarian indicator
Conclusion
Gold’s rally is losing steam ahead of key central bank meetings this week. However, the recent rally has been driven by concerns about a global economic slowdown, and these concerns are likely to remain in place, which could support gold prices.