The Market Positions For A Dovish Rate Hike – How to Trade Gold?

GOLD is trading in line with our analysis Gold Completes Bearish Gartley – What Next on The Cards? It’s still trading sideways below a strong resistance area of $1,250. The market is trading gold with a bullish bias and dollar with a bearish bias which shouldn’t be the case when we are expecting a rate hike from the US economy. This dynamic indicates that the market is not placing too high hopes on the Fed.

So, it seems like the rate hike doesn’t matter anymore. One of the most important points to discuss in today’s FOMC meeting involves the update of the dot plot rate forecasts, as well as potential upcoming updates to the Fed’s balance sheet normalization process.

Fed Rate Hike Sentiment – “Priced In”
Since we all know the Fed is very likely to hike interest rates in December, most of the investors have already taken a long position in the US dollar. Increasing demand for the dollar is weighing on the precious metal as a stronger dollar makes gold a less attractive commodity to buy. Therefore, the dovish FOMC meeting minutes can cause profit taking in the dollar and buying can be seen in gold.

Dovish vs. Hawkish FOMC
In both cases, the “priced in” dollar is likely to retrace back until and unless Powell sounds incredibly hawkish. As a result, we can see some bullishness in the precious metal.

Gold //XAUUSD – Trading Plan
Today gold can soar towards $1,260 and $1,266 on the bullish breakout at $1,250. That’s most likely during the FOMC statement & Fed fund rate release. On the lower side, $1,237 remains a good support zone.

Good luck!

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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