Shorting Gold As the Selloff Continues

Gold has resumed the decline again today after being rejected by the 100 SMA yesterday

Skerdian Meta•Tuesday, September 20, 2022•2 min read

Oil and other commodities feeling better this week

Gold was trading sideways last week after the bearish move which sent the price below the major support zone around $1,680. The decline took the price down to $1,654 although we have seen some sideways price action since then. But, it seems like today the decline is resuming again after the failure at the 100 SMA (green) on the H1 chart, which rejected the price.

Gold H1 Chart – The Selloff Has Resumed Again

The 100 SMA rejected the price yesterday

Today GOLD prices were trading in a tight range again in the futures market as investors remained cautious ahead of the FED rate decision scheduled tomorrow. The FED at the conclusion of its two-day policy meeting on Wednesday, is widely expected to raise interest rates by 75 basis points (bps). Some analysts even see a 100 bps rate hike.

On one hand that would be a bearish move, sending the USD higher and Gold lower. But, the odds for further rate hikes by the FED would come down, which would be bearish for the USD and bullish for Gold. Gold prices have been supported by a pause in the US dollar and IUS bond yields, amid positioning ahead of the FED decisions.

FED’s 0.75% rate hike has been factored in and market players are now assessing the possibility of a surprise move. While some believe there is a possibility of a bigger hike, we believe that the Fed may maintain the pace given signs of improvement in the inflation situation. Amid reduced expectations of a surprise move by the Fed, gold and other commodities have edged up and could see some extended gains,

Comments from Jamie Dimon

US strong on jobs and consumer spending but pressured by inflation, supply chains, war and rate hikes
Economic storm clouds brewing but economists split on the severity
Higher capital requirements are becoming a significant economic risk

That final point certainly sounds like he’s talking his own book.

Gold XAU Live Chart

GOLD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.