Gold Slightly Bearish As FED Announcement Nears

Posted Thursday, November 8, 2018 by
Shain Vernier • 2 min read

December gold futures have traded to the bear and are threatening to post a fifth-consecutive losing session. With the U.S. indices on the rally and USD showing well across the majors, bullion is a distant choice for many investors. There just isn’t much reason for traders to pile into gold at the moment.

Of course, things change. In trading, this is the number one rule, as any political or financial surprise is capable of sending markets directional. However, today’s FED Interest Rate Statement will not be such an event as there is a 92.8% chance that rates are to be held static at 2.25%.

December Gold Futures

Today’s session has been an interesting one for December gold. Early on, it looked like the bottom was set to fall out of this market as sellers probed the 1220.0. Now, the market has found some legs and entered consolidation in the vicinity of 1225.0.

December Gold Futures (GC), Daily Chart
December Gold Futures (GC), Daily Chart

Here are the levels to watch going into today’s FED statements:

  • Resistance(1): Daily SMA, 1229.5
  • Support(1): Bollinger MP, 1224.8

Bottom Line: Although today’s FED Interest Rate Statement is not expected to drive markets much of anywhere, bullion may see a pick up in the action. A test of topside resistance at the Daily SMA will provide a premium place for short scalps.

For the rest of the session, I will have sells queued up from 1229.0. With an initial stop at 1230.6, this trade produces 12 ticks on a sub 1:1 risk vs reward management plan.

Today’s statements from the FED and FOMC are likely to hint at coming rate hikes for next month and 2019. Remember the FED’s September dot plot? A majority of FOMC members agreed that gradual tightening through the end of 2019 is a prudent course of action. Expect this idea to be reinforced by today’s official press release.

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