The Federal Open Market Committee (FOMC) is widely expected to raise interest rates at its two-day meeting starting later in the day, but the focus will be on its outlook for 2019.
· "Investors are hoping gold prices will go up further after the meeting," said Brian Lan, managing director at dealer GoldSilver Central in Singapore, adding that $1,251 would be the next level that gold will likely test with support at $1,245.
· Spot gold was up 0.2 percent at $1,248.14 per ounce at 0436 GMT, while U.S. gold futures inched 0.1 percent higher to $1,252.2per ounce.
· Meanwhile, the dollar index inched lower after losing 0.4 percent on Monday, amid speculation the Fed will soon hit the pause button to its monetary tightening cycle in the face of rising risks to global growth.
· "The U.S. dollar remains the prime mover for gold prices in the current term," Benjamin Lu, a commodities analyst with Phillip Futures in Singapore, said in a note.
"Though upside potential for gold prices faces impediment from a vigorous dollar, looming economic uncertainties will present optimistic conditions for safe-haven assets beyond 2018."
Also supporting the bullion, Asian share markets slumped on Tuesday, while Wall Street stocks skidded to their lowest levels in more than a year in the previous session.
· Spot gold may rise into a range of $1,253-$1,258 per ounce, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
· Gold Technical Analysis: metal sees descending broadening wedge breakout ahead of Fed
Gold is looking north ahead of the FOMC rate decision. The US central bank is seen raising rates by 25 basis points tomorrow. More importantly, the markets believe that the Fed will adopt a wait-and-see approach for 2019.
The rate pause, if confirmed, would bolster the already bullish setup, as indicated by the descending broadening wedge breakout, seen in the chart below.
As seen above, the pair bounced off strongly from the ascending (bullish) 100-candle moving average (MA) yesterday and cleared the wedge hurdle earlier today. Moreover, the wedge breakout has revived the rally from the Nov. 28 low of $1,211.
So, it seems safe to say that the path of least resistance is to the higher side. The immediate hurdle is located at $1,257 - which is the200-day MA hurdle.
The bullish setup, however, would fail if the Fed sounds less dovish-than-expected, sending the US dollar higher across the board.
· Among other precious metals, silver was up 0.1 percent at $14.67 per ounce, while platinum fell 0.3 percent, to $791.10 per ounce
Spot palladium slipped 0.2 percent to $1,255.95 per ounce after touching a record high of $1,269.5 in the previous session.
Reference: Reuters, Kitco
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