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Gold Surges after the FOMC but is the Rally Over?

goldThe price of spot gold (XAU/USD) has surged after the Federal Open Markets Committee (FMOC) decision to keep interest rates as is yesterday afternoon during US and North American trade hours. The after FOMC policy announcement was considered overly dovish which caused the dollar to selloff. US Treasury yields also moved sharply lower after the FOMC. This statement boosted sentiment and appeal for non interest bearing asset classes like gold.

Looking at today’s economic calendar, there is a lack of top tiered news. There is nothing scheduled until Friday’s second quarter (Q2) US GDP figures. S&P 500 futures, as of right now, are pointing cautiously higher. This could lead to a corrective pullback, albeit small, today. Especially if US Treasury rates edge up. This would happen if a risk-on trade mood took hold. This would, in turn cause gold to stall.

Gold Daily Technical Analysis

Let’s look into today’s daily technical analysis for the bullion. Price action is now above a key inflection point at $1,260.80 per ounce. A daily close above this upside barrier challenges the next level of resistance lining up at 1,271.20. There is a congestion zone running to a double top that would then come into focus. This area runs from 1,291.60 to 1,295.50.

The alternative technical analysis notes the first downside barrier lining up at $1,245.90 per ounce. A break below this technical support layer challenges the next downside barrier lining u at 1,230.30.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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